2005 Red River Valley Farm Averages

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2005 Red River ValleyFarm Averages

• Ron Dvergsten, Dean Management Education
• Keith Torgerson, NDSCS

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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.

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Farm Management Education Is Concerned With

• Creating an awareness of the need for accurate
  financial enterprise records.
• Stimulating individuals and families to establish
  goals and set priorities.
• Developing the farm operators understanding of
  the function of management.

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Farm Management Education Is Concerned With

• Developing fundamentals of resource management
  (Financial Human).
• Developing student skills in analyzing and
  interpreting farm business records.
• Developing skills in analyzing data to improve
  the organization and efficiency of the farm
  business.

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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?

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Total Farm Assets

• Total farm assets were up 157,069 over last
  year. (Cost)
• 2001 942,754
• 2002 933,533
• 2003 1,040,285
• 2004 1,109,799
• 2005 1,072,106
• 2006 1,162,753
• 2007 1,319,822

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Total Farm Liabilities

• Total farm liabilities increased 33,298 from
  last year
• 2001 450,197
• 2002 439,460
• 2003 479,715
• 2004 518,780
• 2005 516,592
• 2006 543,610
• 2007 576,908

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Net Worth Change

• This year we had a positive Net Worth change of
  161,030
• 2001 33,963
• 2002 56,960
• 2003 80,856
• 2004 40,762
• 2005 _ 1,326
• 2006 96,816
• 2007 161,030

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Farm Receipts

• Farm receipts increased by 125,084
• 2001 503,573
• 2002 462,678
• 2003 544,816
• 2004 599,921
• 2005 546,515
• 2006 604,651
• 2007 729,735

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Government Payments

• 2001 87,206
• 2002 21,952
• 2003 48,363
• 2004 36,881
• 2005 54,301
• 2006 29,339
• 2007 26,431
• A net decrease of 27,871 from 2005

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Farm Expenses

• Farm expenses were up from 2007 mainly due to the
  increased costs of energy.
• 2002 366,230
• 2003 433,152
• 2004 427,807
• 2005 454,623
• 2006 508,716
• 2007 602,429

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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.

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Net Farm Income For Valley

• Net farm income for farms in the Valley averaged
  239,585 which was a increase of 80,009 from
  2006.
• Net farm income for the low 20 of the farms
  averaged a positive 31,237.
• Net farm income for the high 20 of the farms
  averaged 589,863 which is a 193,969 increase
  from 2006. This was the highest net farm income
  ever for this group

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Net Farm Income Profit
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Where did this years Net Farm Income Come From

• Higher Farm Prices
• Gains in inventory value.
• For example, if you had 5,000 bushels of
  Soybeans on the beginning balance sheet that
  where valued _at_ 6.00 and you sold them for a 1
  more, that would increase net farm income by
  5,000.
• Disaster Payments
• For many, especially in the Northern Part of the
  Valley, it was just a good crop
• Crop Insurance

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Crops and Feed Inventory Change

• This year we had a positive inventory change of
  142,528

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Expense/ Income

• This year and last year it cost a Valley farmer
  about 68 cents (accrual) to make a dollars worth
  of income compared to 73 cents in 2006

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Fuel Costs

• Seems to favor those farms who can purchase fuel
  in December or January

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Fuel Costs All Acres
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Farm Equipment Purchases, AGood Useful Pickup
is Tough to Beat.
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Machinery Purchased

• Machinery purchased for the year was 81,723 up
  31,637 from last year

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Non-Farm Income and Family Living Information
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Total Family Living ExpenseRed River Valley Farm
Business Mgmt.
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Non Farm Income

• Average Non Farm Income was 16,637 which is up
  631 from last year

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Net Return for Crops

• Does not include Government Transition Payments
• Does include LDP and Insurance which shows up in
  the price of the commodity and the other crop
  income

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Crop Acres
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Crop Yields, Costs and Returns
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Spring Wheat Yield

• This year the spring wheat yield was down
  5bushels from last year mainly in the southern
  part of the valley
• 2001 47 bu
• 2002 36 bu
• 2003 61 bu
• 2004 64 bu
• 2005 42 bu
• 2006 53 bu
• 2007 48 bu

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Spring Wheat Fertilizer Costs Per Acre
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Fertilizer

• Fertilizer Costs for both wheat and corn would
  have been higher if not for fall applied
  fertilizer in 2004, 2005, 2006 and 2007.
• This trend looks like it will continue for the
  2008 crop with spring fertilizer costing more
  than the fall applied

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Spring Wheat Net Return/Acre

• The net return per acre of wheat on cash rented
  land was positive this year
• 2007
• Average 77.99
• Low 20 - 44.20
• High 20 198.44

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Soybeans Net Return/Acre

• Soybeans returned 113.78 per acre.
• Average yield was 36.31 bu per acre
• Average return was the best ever with an average
  price of 8.90

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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

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Corn Fertilizer Costs
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Current Ratio
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Current Ratio
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Working Capital Increased
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Working Capital/Group
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Rate of Return on Equity/Year (Cost)
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Rate of Return on Equity/Group
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Capital Replacement Dollars/Year Increased for
each group
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Capital Replacement Dollars/Group
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Operating Expense Ratio/Year
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Operating Expense Ratio Improved Greatly from
Last Year
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Net Farm Income/Year
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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 dos your business stack up?
• Evaluate possible changes if needed.

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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 the low cost producer?
• How about value added industries???

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Please do not inquire as to the apparent
inefficiency of my work. The nature of it
requires such a high degree of secrecy that I am
not permitted to know what I am doing.
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We will continue to use the same tax form as in
past years.
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For More Information
Farm Business Management
For more information call
1-800-959-6282 ext. 0797 1-800-342-4325 ext 2630
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A Educational Program of North Dakota Career and
Technical Education
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Thank You!