2005 Red River ValleyFarm Averages

Ron Dvergsten, Dean Management Education

Keith Torgerson, NDSCS

Farms in the Annual Red River Valley Annual Report

FINAN, the analysis software, allows us to take a closer look at the farms in a region or state.

We can create summaries of: Farm Size (based on Gross Income) Type of Farm (based on 70% of gross income) Age of Operator Other special sorts based on location, production

practices, enterprise selection and size, etc.

Farm Management Education Is Concerned With:

1. Creating an awareness of the need for accurate financial & enterprise records.

2. Stimulating individuals and families to establish goals and set priorities.

3. Developing the farm operator’s understanding of the function of management.

Farm Management Education Is Concerned With:

4. Developing fundamentals of resource management (Financial & Human).

5. Developing student skills in analyzing and interpreting farm business records.

6. Developing skills in analyzing data to improve the organization and efficiency of the farm business.

Ask Yourself these Questions. How do I compare?

With my previous farm history? With local or county information? With area and statewide information?

Is my farm getting the financial returns that I want or need? How do I go about making my farm business more efficient or profitable? This year is more difficult because of how much input costs varied.

Some Challenges For 2009

Fall Harvest Many of you spent a great deal of extra

money to get the crop off. The number of Sugar Beet and Corn Acres

that people could not harvest because of the wet fall

Protein Discounts on Spring Wheat

Total Farm Assets

Total farm assets decreased $49,156 over last year. (Cost)

2003 $1,040,285 2004 $1,109,799 2005 $1,072,106 2006 $1,162,753 2007 $1,319,822 2008 $1,594,701 2009 $1,545,551

Total Farm Liabilities

Total farm liabilities increased $2,797 from last year

2003 $479,715 2004 $518,780 2005 $516,592 2006 $543,610 2007 $576,908 2008 $681,055 2009 $683,852

Net Worth Change

This year we had a positive Net Worth change of $6,849

2003 $80,856 2004 $40,762 2005 -$ 1,326 2006 $96,816 2007 $161,030 2008 $165,651 2009 $6,849

Farm Receipts

Farm receipts decreased by $54,703 due mainly to the lower commodity prices

2003 $544,816 2004 $599,921 2005 $546,515 2006 $604,651 2007 $729,735 2008 $897,727 2009 $843,024

Government PaymentsThis includes direct, crp, and disaster payments.

2003 $48,363 2004 $36,881 2005 $54,301 2006 $29,339 2007 $26,431 2008 $36,533 2009 $23,746

Farm Expenses

Cash farm expenses were down $66,846

2003 $433,152 2004

$427,807 2005 $454,623 2006 $508,716 2007 $602,429 2008 $718,042 2009 $651,196

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Cash Farm Expenses

How the $738,039 was spent including family living

Net Farm Income

This is the net cash farm income after being adjusted first for inventory change and than for depreciation

This is the calculated profit for the year If more money than indicated on net farm income is

spent on family living, personal taxes, and new investments, it must be taken from inventory sales, the capital replacement dollars, new borrowings, or from off farm income. It is also calculated under the cost balance sheet.

Net Farm Income For Valley

Net farm income for farms in the Valley averaged $76,592 which was a decrease of $201,098 from 2008.

Net farm income for the low 20% of the farms averaged a negative $79,432.

Net farm income for the high 20% of the farms averaged $305,178

Net farm income for the people in the 40%-60% averaged $46,419

Net Farm Income (Profit) By Year

Some Factors That Caused the Drop in Net Farm Income

High Discounts on Wheat and Corn Sales Loss in inventory value. For example, if you had 5,000 bushels of

Soybeans on the beginning balance sheet that where valued @ $10.00 and you sold them for a $1 less, that would decrease net farm income by $5,000.

High Input Costs Difficult Harvest Crop left in the field

Crops and Feed Inventory Change

This year we had a negative inventory change of $70,541 compared to a positive change of $144,392 last year

$ Expense/$ Income

This year and last year it cost a Valley farmer about 80.5 cents (accrual) compared to 64.4 cents (accrual) to make a dollar’s worth of income. This number is the operating expense ratio and does not include interest or depreciation expense.

Fuel Cost/Acre Decreased this Year

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35

2004 2005 2006 2007 2008 2009

Acres Farmed Stayed Steady

Machinery Purchased

Machinery purchased for the year was $125,021 up $12,734 from last year

Non-Farm Income and Family Living Information

Apparent Family Living

54611 54885 5317257274

65323 67600

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2004 2005 2006 2007 2008 2009

Non Farm Income

Average Non Farm Income was $19,123

Net Return for Crops

Does not include Government Transition Payments

Does include Crop Insurance and RA and CRC insurance

Crop Yields, Costs and Returns

Spring Wheat Yield

This year the spring wheat yield was up 1 bushel per acre

2003 61 bu 2004 64 bu 2005 42 bu 2006 53 bu 2007 48 bu 2008 63 bu 2009 64 bu

Spring Wheat Fertilizer Costs Per Acre

0102030405060708090

100

2004 2005 2006 2007 2008 2009

Spring Wheat Negative Return/Acre

The net return per acre of wheat on cash rented land was positive this year

2009

Average -$21.77

Low 20% - $111.40

High 20% $49.66

Soybeans Net Return/Acre

Soybeans returned $33.13 per acre. Average yield was 31 bu per acre

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120

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Corn Yields & Net Return per Acre

Yield Net Return

2003 127 bu $21.84 2004 105 bu -$11.63 2005 145 bu $37.54 2006 138 bu $51.51 2007 131 bu $140.54 2008 155 bu $132.49 2009 132 bu -$47.95

Corn Fertilizer Costs Per Acre

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120

140

160

2004 2005 2006 2007 2008 2009

Current Ratio

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

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3-D Column 4

Current Ratio

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Working Capital Decreased

-200000

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Working Capital/Group

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Rate of Return on Equity/Year (Cost)

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2000 2001 2002 2003 2004 2005 2006 2007 2008 200

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Rate of Return on Equity/Group

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Capital Replacement Dollars/Year decreased for each group

-200000

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

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Capital Replacement Dollars/Group

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2009

Operating Expense Ratio Increased from last year

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Net Farm Income/Year

-100000

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Net Farm Income/Group

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Conclusions about the ratios

Start to compare your information to the last 3 to 5 years of data.

Determine your own trend lines. Compare your data to the area averages. How does your business stack up? Evaluate possible changes if needed.

Where are we headed?

Major increase in the use technology. Precision agriculture Biotechnologies (Livestock & Crops) Internet

Find new Suppliers, products, markets Evaluating new technologies or products E-Commerce

Are you working with partners to use capital more efficiently?

Is your business a low cost producer? How about value added industries???

For more information call 1-800-959-6282 ext. 07971-800-342-4325 ext 2630

For More Information

Farm BusinessManagement

A Educational Program of North Dakota Career and Technical Education

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