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2005 Red River Valley Farm Averages

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:

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2005 Red River Valley Farm Averages

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  1. 2005 Red River ValleyFarm Averages Ron Dvergsten, Dean Management Education Keith Torgerson, NDSCS

  2. 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.

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

  4. 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.

  5. 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.

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. How the $738,039 was spent including family living

  14. 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.

  15. 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

  16. Net Farm Income (Profit) By Year

  17. 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

  18. 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

  19. $ 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.

  20. Fuel Cost/Acre Decreased this Year

  21. Acres Farmed Stayed Steady

  22. Machinery Purchased • Machinery purchased for the year was $125,021 up $12,734 from last year

  23. Non-Farm Income and Family Living Information

  24. Apparent Family Living

  25. Non Farm Income • Average Non Farm Income was $19,123

  26. Net Return for Crops • Does not include Government Transition Payments • Does include Crop Insurance and RA and CRC insurance

  27. Crop Yields, Costs and Returns

  28. 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

  29. Spring Wheat Fertilizer Costs Per Acre

  30. 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

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

  32. 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

  33. Corn Fertilizer Costs Per Acre

  34. Current Ratio

  35. Current Ratio

  36. Working Capital Decreased

  37. Working Capital/Group

  38. Rate of Return on Equity/Year (Cost)

  39. Rate of Return on Equity/Group

  40. Capital Replacement Dollars/Year decreased for each group

  41. Capital Replacement Dollars/Group

  42. Operating Expense Ratio Increased from last year

  43. Net Farm Income/Year

  44. Net Farm Income/Group

  45. 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.

  46. 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???

  47. For More Information Farm Business Management For more information call 1-800-959-6282 ext. 0797 1-800-342-4325 ext 2630

  48. A Educational Program of North Dakota Career and Technical Education

  49. Thank You

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