2005 Red River Valley Farm 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, $1,109, $1,072, $1,162, $1,319, $1,594, $1,545,551

Total Farm Liabilities Total farm liabilities increased $2,797 from last year 2003 $479, $518, $516, $543, $576, $681, $683,852

Net Worth Change This year we had a positive Net Worth change of $6, $80, $40, $ 1, $96, $161, $165, $6,849

Farm Receipts Farm receipts decreased by $54,703 due mainly to the lower commodity prices 2003 $544, $599, $546, $604, $729, $897, $843,024

Government Payments This includes direct, crp, and disaster payments $48, $36, $54, $29, $26, $36, $23,746

Farm Expenses Cash farm expenses were down $66, $433, $427, $454, $508, $602, $718, $651,196

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 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 $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

Acres Farmed Stayed Steady

Farm Equipment Purchases, A Good Useful Pickup is Tough to Beat.

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

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 bu bu bu bu bu bu bu

Spring Wheat Fertilizer Costs Per Acre

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% - $ High 20% $49.66

Soybeans Net Return/Acre Soybeans returned $33.13 per acre. Average yield was 31 bu per acre

Corn Yields & Net Return per Acre YieldNet Return bu $ bu -$ bu $ bu $ bu $ bu $ bu -$47.95

Corn Fertilizer Costs Per Acre

Current Ratio

Working Capital Decreased

Working Capital/Group

Rate of Return on Equity/Year (Cost)

Rate of Return on Equity/Group

Capital Replacement Dollars/Year decreased for each group

Capital Replacement Dollars/Group

Operating Expense Ratio/Year

Operating Expense Ratio Increased from last year

Net Farm Income/Year

Net Farm Income/Group

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???

We will continue to use the same tax form as in past years.

For more information call ext ext 2630 For More Information Farm Business Management

A Educational Program of North Dakota Career and Technical Education

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