4 reasons why fruit and vegetable growers need a cash flow statement

Creating a cash flow statement for your fruit and vegetable operation can be tempting. However, filled with projections and estimates, the uncertainty of some elements of cash flow planning can be an excuse for delay.

FCC Senior Relationship Manager Paul Bateman challenges fruit and vegetable producers to shift their thinking.

“Consider a cash flow statement as a foundation or base-case scenario,” Bateman says. “Once complete, you can use it to test infinite scenarios. Think of it as a tool, not a task.”

Here are four reasons why a cash flow statement is a necessary part of a fruit and vegetable farm operation:

1. Cash inflow and outflow variances

Fruit and vegetable crops are labour-intensive, resulting in high labour costs during the growing and harvest season.

“Horticulture crops tend to have higher crop maintenance needs throughout the growing period with more fertilizer and pesticide applications,” explains John Molenhuis, a business analysis and cost of production specialist with Ontario’s Ministry of Agriculture, Food and Rural Affairs. As a result, money is going out with little money coming in, which needs careful consideration.

2. Short shelf life

You can’t store your fruit and vegetable crops while waiting for better prices. Most of the crops are perishable with limited shelf life or storage life.

“They are marketed shortly after harvest, so most of the cash inflows occur shortly after a particular crop is harvested,” Molenhuis says. The timing of these sales can help in arranging things like loan repayment schedules.”

3. Delayed crop establishment

Many horticulture crops have long establishment periods before reaching full production.

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