7 Steps to Write an Onion Farming Business Plan (3-Year Forecast);

How to Write a Business Plan for Onion Farming

Follow 7 practical steps to create an Onion Farming business plan in 10–15 pages, with a 10-year forecast, breakeven at 7 months (July 2026), and initial funding needs near $14 million clearly explained in numbers

How to Write a Business Plan for Onion Farming in 7 Steps

#	Step Name	Plan Section	Key Focus	Main Output/Deliverable
1	Define Concept and Product Mix	Concept	50 Ha split, 80% yield loss assumption	Product allocation plan
2	Analyze Market and Pricing Strategy	Market	Weighted average $056/kg vs premium $120/kg	Pricing justification memo
3	Outline Operations and Land Strategy	Operations	$150k purchase, $108k lease, $12M CAPEX	Land strategy document
4	Develop the Team and Organizational Structure	Team	65 FTEs, key salaries ($90k/$75k)	2026 staffing model
5	Map Costs of Goods Sold (COGS) and Operating Expenses	Financials	10% COGS, $13,800 monthly fixed overhead	Detailed expense schedule
6	Create the Revenue and Breakeven Forecast	Financials	$779,240 revenue, 7-month path to profitability	Breakeven timeline chart
7	Determine Funding Needs and Capital Structure	Financials	$1,364,000 required, 722% ROE target	Capital request summary

What is the optimal land acquisition and financing mix for long-term scalability?

The optimal strategy for Onion Farming starts lean by leasing 90% of the initial 50 Hectares in 2026, locking in operational flexibility while planning a measured shift toward 50% ownership by 2035. This approach minimizes upfront capital strain while allowing the business to scale production immediately, which is key when looking at What Is The Main Indicator Of Growth For Onion Farming?

Initial Capital Strategy

Start with 50 Hectares under management in 2026.
Lease 90% (45 Ha) to keep initial cash outlay low.
Monthly lease expense hits $9,000 (45 Ha x $200/Ha).
This defintely preserves capital for operational needs, like seed or labor.

Path to Ownership

Target achieving 50% ownership of land by 2035.
This means acquiring 25 Hectares over the next decade.
The current purchase price is $15,000 per Ha.
Buying 25 Ha at that rate requires $375,000 in capital investment.

How do we maximize high-margin specialty crop revenue while managing yield risk?

To maximize revenue for Onion Farming, you must prioritize aggressively reducing yield loss on Specialty Onions, which command a massive premium over bulk, even if current land allocation favors volume. This focus is critical because the margin difference is staggering, but you need a concrete plan to address inherent agricultural volatility; Are Your Operational Costs For Onion Farming Optimized?

Specialty Margin vs. Volume Split

Specialty Onions target $120/kg revenue by 2026.
Yellow Bulk onions only bring in $0.50/kg.
Current allocation balances 40% volume to Yellow Bulk production.
Specialty crops currently receive only 10% of the land allocation mix.

Managing Critical Yield Risk

Yield loss starts severely impacting the business when it hits 80% loss.
The operational goal is cutting total yield loss down to 50%.
This reduction target must be achieved by the year 2035.
Precision farming models must drive this improvement to secure premium pricing.

What is the minimum capital required to cover CAPEX and working capital until positive cash flow?

Covering the initial capital expenditure (CAPEX) of $12 million for land and equipment requires significant funding, but the real pinch point is the $1,364,000 minimum cash balance needed in January 2027, as detailed when assessing Is Onion Farming Currently Achieving Sustainable Profitability?

Initial CAPEX Funding

Total initial CAPEX is $12 million.
This covers the purchase of necessary farm land.
It also funds specialized cultivation equipment.
Cold storage infrastructure is part of this outlay.

Working Capital Trough

The minimum required cash position is $1,364,000.
This critical low point happens in January 2027.
This dip reflects defintely post-harvest operating costs.
You must secure runway capital to survive this period.

How does the seasonal harvest cycle impact cash flow and inventory management requirements?

The seasonal nature of the Onion Farming harvest, running heavily from May through December, forces you to front-load major capital expenditure for storage before realizing revenue. This timing mismatch between harvest realization and sales completion—which can take up to 6 months for certain stock—is where cash flow gets stressed, so you need to review how much storage capacity you really need. Check out this resource on managing expenses: Are Your Operational Costs For Onion Farming Optimized?

Storage CAPEX & Holding Times

Initial CAPEX for necessary cold storage capacity is $250,000.
Harvest concentration occurs between May and December.
Inventory for Processing onions sells out in about 2 months.
Yellow Bulk inventory requires a 6-month sales cycle.

Cash Flow Strain Points

The 6-month lag for Yellow Bulk ties up capital longer.
Cash flow dips occur post-harvest while waiting for distributor payments.
Prioritize selling the 2-month cycle stock first for quicker cash return.
Ensure working capital reserves cover 6 months of fixed costs post-harvest peak.

Key Takeaways

Achieving the projected scale requires securing nearly $14 million in initial funding to cover the $12 million CAPEX and essential working capital needs.
The financial model demonstrates a rapid path to profitability, achieving cash flow breakeven just seven months after launch in July 2026.
Maximizing profitability relies on a strategic product mix prioritizing high-margin Specialty Onions ($120/kg) over standard bulk varieties.
The initial land strategy prioritizes capital preservation by leasing 90% of the required 50 hectares, while long-term scalability targets 50% ownership by 2035.

Step 1 : Define Concept and Product Mix

Farm Blueprint

This step defines your physical capacity and sets the floor for revenue projections. You must lock down acreage allocation before calculating yield potential. We are building this around a 50 hectare (Ha) operation. This land is split immediately: 40% targets Yellow Bulk onions, and 10% is reserved for Specialty Onions. Honesty about initial risk is crucial; we must build the model assuming a severe 80% yield loss in 2026.

This initial allocation directly impacts your Cost of Goods Sold (COGS) structure later. The remaining 50% of the land needs definition quickly, or it becomes sunk cost overhead. Setting the loss assumption this high forces you to plan for significant working capital early on.

Market Alignment

Your target market is strictly B2B (business-to-business): wholesale distributors, regional supermarket chains, food processing facilities, and restaurant suppliers. The Yellow Bulk volume supports large, steady distribution contracts, while the Specialty Onions are priced to capture higher margins. You need to defintely validate that 80% loss projection against regional historical data.

If your agronomy team’s initial results show better performance, you can quickly adjust the revenue forecast upward. However, starting with the worst-case yield loss ensures you don't run short on cash when variables go against you.

Step 2 : Analyze Market and Pricing Strategy

Pricing Leverage

The $0.56/kg weighted average revenue projected for 2026 hinges entirely on capturing a significant premium for Specialty Onions, which command $120/kg against the bulk product floor of $30/kg. Getting your pricing right defines profitability in commodity agriculture. You must justify this wide price gap between your premium and bulk offerings based on documented market demand for consistency. If demand for the high-end product softens, that $120/kg price point collapses, dragging down the overall average revenue per kilogram substantially.

Modeling the Mix

Here’s the quick math: Specialty Onions, though representing a small portion of volume, carry massive leverage. To achieve the $0.56/kg target, the low-end Processing Onions must sell near $30/kg, while the high-end product must hold its premium. This structure requires flawless execution on quality control; buyers paying 4x the base price expect zero defects. Focus sales efforts strictly on partners who value supply chain reliability over minor price breaks.

Step 3 : Outline Operations and Land Strategy

Land Structure & Initial Spend

Securing the 50-hectare (Ha) footprint defintely defines operational capacity. You must clearly separate owned assets from leased space early on. This decision directly impacts your initial debt load and long-term fixed costs. If onboarding takes 14+ days, churn risk rises.

CAPEX Timing

Schedule the $12 million initial CAPEX for specialized machinery and storage immediately after land control is established. The land strategy involves buying 10 Ha for $150,000 while leasing the remaining 45 Ha for $108,000 annually. This split balances immediate control with scalable operating expense.

Step 4 : Develop the Team and Organizational Structure

2026 Headcount Plan

Scaling to 65 Full-Time Equivalents (FTEs) by 2026 is non-negotiable for managing the 50 Ha precision farm, especially covering the critical harvest cycle. This headcount must balance specialized roles, like the Agronomist, with the high-volume demands of seasonal labor. If you understaff, crop quality suffers; if you overstaff fixed roles, your overhead crushes the early revenue projections.

You need to budget for key leadership now. The Farm Manager commands a $90,000 annual salary, and the Agronomist requires $75,000. These two roles anchor the technical strategy. The remaining 63 FTEs must be allocated across maintenance, logistics, and, crucially, supervising the seasonal labor surge that drives the primary revenue generation.

Staffing Allocation Levers

To manage 65 people effectively, structure supervision tightly across operational areas. You must dedicate specific FTEs to logistics—handling movement from the field to primary storage—and a large block to overseeing temporary seasonal workers. Remember, the $108,000 annual land lease payment depends on timely, efficient operations that these teams execute.

Calculate the committed salary base for just the two named roles: $165,000 per year. Your focus now must be on defining the structure for the other 63 people. Are they permanent support staff or seasonal hires? You defintely need a clear plan to keep variable labor costs low relative to the 10% COGS forecast for labor and packaging.

Step 5 : Map Costs of Goods Sold (COGS) and Operating Expenses

Cost Structure Set

Accurately mapping costs shows your true profitability before overhead hits. For this onion operation, we set Costs of Goods Sold (COGS), which are direct costs tied to production, at a tight 10% of revenue. This 10% is split: 6% for direct inputs like seeds and fertilizer, and 4% for direct labor and packaging. Getting this split wrong means your projected gross margins are fiction.

This low COGS assumption relies heavily on the precision farming model maximizing yield per hectare. If crop loss exceeds the 80% assumption from Step 1, these input costs spike relative to actual sales, crushing contribution margin fast.

Fixed Cost Reality Check

Fixed overhead requires careful monthly tracking because these costs don't change with sales volume. Total base monthly fixed costs start at $13,800. But you can't forget that large land commitment. That $108,000 annual land lease payment breaks down to exactly $9,000 per month.

So, your true fixed overhead is defintely $22,800 monthly ($13,800 plus $9,000). This combined figure dictates the minimum revenue volume you must hit before you start making money. Keep this number clean.

Step 6 : Create the Revenue and Breakeven Forecast

Revenue & Breakeven Timing

Forecasting revenue anchors the entire financial model. For this operation, the $779,240 annual target for 2026 depends entirely on hitting projected yields against the weighted average price of $0.56/kg. The critical insight here is timing. We expect to hit breakeven in July 2026, just seven months in. This rapid path is only possible because the primary harvest season concentrates cash inflow early.

Missing the harvest window means delaying profitability significantly. We must manage working capital tightly until that first major cash infusion hits. That July breakeven point is non-negotiable for securing follow-on funding later in 2027. Honestly, if the harvest is slow to move, you’re in trouble.

Forecasting Yield Impact

Here’s the quick math on hitting that target. If we achieve the necessary yield volume to generate $779,240, we need to ensure the bulk of that volume moves before the end of the main harvest cycle. The revenue model relies on selling volume at the blended rate, which incorporates the premium Specialty Onions at $120/kg and Processing Onions at $0.30/kg.

To cover the monthly fixed overhead of $13,800, we need about $15,333 in gross profit, since Cost of Goods Sold (COGS) is only 10% of revenue. The 7-month path to break-even hinges on front-loading sales right after harvest starts. If harvest volume is delayed past Q2, the operational burn rate will exhaust working capital before the major revenue streams materialize.

Step 7 : Determine Funding Needs and Capital Structure

Capital Ask Defined

You need a precise capital ask to keep the lights on and buy the big equipment. This step bridges the gap between your financial projections and the actual bank account balance. The biggest hurdle here is funding the initial asset base. We must account for the massive $12 million CAPEX required for machinery and storage infrastructure.

You've got to defintely secure this funding by January 2027. This deadline is non-negotiable because it aligns with the ramp-up phase before sustained positive cash flow hits. Missing this date means delaying critical planting and harvest capabilities.

Investor Benchmark ROE

The total funding requirement identified to cover the gap is exactly $1,364,000. This amount covers the remaining working capital needed after initial revenue starts flowing. You must clearly show how this bridges the gap to full operational capacity.

Investors use the projected Return on Equity (ROE, or profit compared to equity invested) as their main yardstick for risk. For this onion farm, the model shows a potential ROE of 722%. That figure is your primary benchmark when negotiating terms with potential partners.