How do I review an orchard’s farm records and expense receipts before buying?
Ask for harvest logs, spray and fertilizer records, packing house statements and expense receipts, then check that they agree with the financial statements. Look at each block of trees separately, and test whether the receipts match the work the records say was done. Gaps between paper and orchard are the thing to chase.
An orchard keeps its story in several places, and they should agree. Ask for the harvest records by block or variety, the packing or sales statements that show what was delivered, and the bank deposits that follow. If the tonnage in the logs, the sales slips and the deposits do not line up, ask why.
Then read the expense side. Take a sample of receipts for spray, fertilizer, pruning labour, fuel, repairs and bins, and ask whether the activity in each matches the orchard calendar. A season with little spraying but heavy repair costs tells you something. So does labour that appears in the books but not in the work diary.
Walk the blocks with the seller and note tree age, spacing, gaps, pests and disease signs. Ask which blocks are producing well and which are due for replanting, because replanting changes income for a stretch. Finally, ask what records the seller does not keep. A thin paper trail does not mean a poor orchard, but it does mean more of the picture rests on your own inspection and on your accountant’s review.
Key takeaways
- Make the harvest logs, sales statements and bank deposits agree before you trust any of them.
- Test a sample of expense receipts against the orchard’s work calendar.
- Walk each block and ask which are due for replanting.
- Note which records the seller does not keep, and rely more on your own inspection.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
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