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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
0
20000
40000
60000
80000
100000
120000Se
ed
Ferti
lizer
Crop
Ins
Crop
Dry
ing
Inte
rest
Fuel
Repa
irs
Hir
ed L
abor
Land
Ren
t
RE T
axes
Fam
ily L
ivin
g
Inco
me
Tax
Oth
er
Util
ities
Prof
Fee
s
Farm
Insu
ranc
e
Suga
r Lea
se
Chem
ical
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
0
5
10
15
20
25
30
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
0
10000
20000
30000
40000
50000
60000
70000
80000
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
-20
0
20
40
60
80
100
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
0
20
40
60
80
100
120
140
160
2004 2005 2006 2007 2008 2009
Current Ratio
0
0.5
1
1.5
2
2.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Ave.
Low 20%
High 20%
3-D Column 4
Current Ratio
0
0.5
1
1.5
2
2.5
Ave. Low 20% High 20%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Working Capital Decreased
-200000
0
200000
400000
600000
800000
1000000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Ave.
Low 20%
High 20%
Working Capital/Group
-200000
0
200000
400000
600000
800000
1000000
Ave. Low 20% High 20%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Rate of Return on Equity/Year (Cost)
-20
-15
-10
-5
0
5
10
15
20
25
30
2000 2001 2002 2003 2004 2005 2006 2007 2008 200
Ave.
Low 20%
High 20%
Rate of Return on Equity/Group
-20
-15
-10
-5
0
5
10
15
20
25
30
Ave. Low 20% High 20%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Capital Replacement Dollars/Year decreased for each group
-200000
-100000
0
100000
200000
300000
400000
500000
600000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Ave.
Low 20%
High 20%
Capital Replacement Dollars/Group
-200000
-100000
0
100000
200000
300000
400000
500000
600000
Ave. Low 20% High 20%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Operating Expense Ratio Increased from last year
0
10
20
30
40
50
60
70
80
90
100
Ave. Low 20% High 20%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Net Farm Income/Year
-100000
0
100000
200000
300000
400000
500000
600000
700000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Ave.
Low 20%
High 20%
Net Farm Income/Group
-100000
0
100000
200000
300000
400000
500000
600000
700000
Ave. Low 20% High 20%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
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
Thank You