Financial Analysis Tools for On-Farm and Off-Farm Commercial Kitchens

This article describes two spreadsheet-based tools designed to help farmers evaluate the viability of building and operating commercial kitchens, on-farm and off-farm, to meet the demand for locally processed foods. Both tools let users define the processing activities and kitchen capacity, including the appropriate equipment, personnel needs, days of operation, and processed products. The on-farm kitchen model provides annual return estimates, allowing users to change recipes each year to match changes in annual farm production. The off-farm kitchen model assumes a stand-alone facility with depreciation schedules, loan amortization schedules, 10-year profit/ loss projections, and various measures of return on investment.