Free Farm Profit and Loss Template

Running a farm is no small feat. Whether you're growing crops, raising livestock, or a mix of both, keeping track of what is making money can sometimes be overwhelming. From managing machinery and labor to dealing with weather uncertainties and market fluctuations, it’s easy to lose track of your farm's financials. However, keeping a Profit and Loss (P&L) statement for your farm is one of the most effective ways to ensure financial success and sustainability.

We've spoken many times about how important a farm business plan is to the success of your farm, but today we'd like to go a step further and talk about the business after you've gotten up and running.

In this post, we’ll dive into why a P&L statement is the heartbeat of your farm and how you can start keeping one to track your farm’s financial health.

Why You Should Keep a Profit and Loss Statement for Your Farm

A Profit and Loss (P&L) statement shows the health of your business. It provides essential insight into the financial health of your farm. By tracking income and expenses, a P&L helps farmers understand whether they’re operating at a profit or facing losses, allowing them to make informed decisions about pricing, investments, and resource management.

It also helps identify areas where costs can be reduced or where revenue can be increased. A well-maintained P&L statement is not only crucial for day-to-day financial management, but it also simplifies tax preparation, ensures better cash flow management, and strengthens a farmer’s ability to secure funding or loans from investors or financial institutions. Ultimately, keeping a P&L helps ensure the long-term sustainability and success of your farm business. Here are 5 reasons why you should keep a profit and loss statement.

1. Understand Your Farm’s Financial Health

A P&L statement provides a clear snapshot of your farm’s income and expenses. It helps you track how much you are earning from your crops, livestock, and other farm activities, as well as how much you're spending on supplies, labor, equipment, and maintenance. By reviewing this regularly, you can quickly identify whether you're operating at a profit or facing losses, which helps in making better business decisions.

2. Make Informed Business Decisions

Farmers need to be strategic about their resources. Whether you're considering expanding, diversifying into a new crop, or adjusting your pricing strategy, a P&L statement helps you analyze your profitability. If you see that a particular crop or livestock type is underperforming, the P&L report can guide you in making informed choices about whether to adjust your approach or cut your losses and move in a different direction.

3. Monitor Cash Flow

Cash flow is the lifeblood of any business, and farming is no exception. A P&L statement can help you keep an eye on the timing of your income and expenses. For example, farming often has seasonal peaks and valleys, and understanding when money will come in and go out can help you plan for leaner months and avoid financial stress.

4. Attract Funding and Investment

If you need a loan, grant, or investor support for your farm, having accurate financial records is essential. Lenders and investors typically require a detailed P&L statement to assess the viability of your farm business. Having your financials organized and transparent will demonstrate that you are a responsible, informed, and trustworthy farmer, which can significantly increase your chances of securing funding.

5. Tax Purposes

Tax season can be stressful enough without having to scramble for financial records. A P&L statement makes it easier to prepare for tax filing by providing a clear breakdown of your income and expenses. It also helps identify areas where you may be eligible for tax deductions, which could lower your tax liability. Keeping your farm finances organized year-round is key to making tax season much more manageable.

How to Start Keeping a Profit and Loss Statement for Your Farm

Now that you understand why it's so important, let’s look at how you can set up and maintain a Profit and Loss statement for your farm. It doesn't have to be anything complicated. We've added a template below for reference. Add all the income and expenses from your farm to a similar document, or use Farmbrite, farm accounting software, to help you keep track of farm financials and farm accounting and create a custom chart of accounts.

Track Your Income

Your income can come from various sources, depending on the type of farm you operate. These might include:

• Crop sales (vegetables, grains, fruits, etc.)

• Livestock sales (cattle, pigs, chickens, etc.)

• Farm products (eggs, milk, honey, etc.)

• Government subsidies or grants

• Rental income (if you rent out part of your farm)

Record all sources of income separately so you can track which areas of your business are the most profitable.

List Your Expenses

Next, categorize all the expenses involved in running your farm. Common farm expenses include:

• Labor costs (wages, seasonal workers, contractors)

• Feed, seed, and fertilizer

• Farm equipment (maintenance, repair, fuel)

• Utilities (water, electricity, fuel)

• Insurance

• Marketing and sales expenses (advertising, transportation)

• Property taxes and rent

Tracking these expenses is essential to calculating your net income (income after expenses).

Organize Your P&L

The basic format of a profit and loss statement is relatively simple:

1. Revenue: Total income from all sources

2. Cost of Goods Sold (COGS): Direct expenses related to producing goods, such as seed, feed, or labor, specifically for crop or livestock production

3. Gross Profit: Revenue minus COGS

4. Operating Expenses: All other expenses related to running the farm, like utilities, equipment maintenance, and insurance

5. Net Profit/Loss: Gross profit minus operating expenses

There are many software tools available to help automate the process of creating P&L statements, like Farmbrite. But you can use a simple spreadsheet as well if you prefer to do it manually.

4. Review and Analyze

Once you’ve set up your P&L statement, it’s important to review it regularly—ideally, at the end of each month or quarter. Look at:

• Profit margins: Are there specific areas where you can cut costs or increase revenue?

• Seasonality: How do your income and expenses fluctuate throughout the year? Are there times when your farm is most profitable?

• Trends: Are your expenses rising without a corresponding increase in income? This could signal inefficiencies.

5. Make Adjustments as Needed

Your P&L statement isn’t just a record—it’s a tool for decision-making. If you notice that certain expenses are too high or that your revenue isn’t meeting expectations, it’s time to adjust your practices. Whether it’s changing suppliers, adjusting crop yields, or cutting unnecessary costs, the P&L gives you the insight needed to make better financial choices.

Below you will find a simple P&L template to get you started. We've left some blank areas to add things like livestock costs, veterinary costs, plants and seeds, equipment, and more. If you would like a more custom profit and loss, Farmbrite's accounting and financial section is easy to use and affordable.

Final Thoughts

A Profit and Loss statement is one of the simplest yet most powerful tools a farmer can use to ensure long-term success. By maintaining a P&L, you’ll gain a better understanding of your financial position, be able to make more informed decisions, and stay on top of your farm’s financial health.

So, whether you’re just starting out or you've been farming for years, now’s the perfect time to start keeping a Profit and Loss statement. It will help you make smarter, more strategic choices that support both your immediate and long-term farming goals. Happy farming, and here's to your financial success!

As always, we wish you the best of success in your farming operations! Happy farming!