NEWS for North Dakotans
Agriculture Communication, North Dakota
State University
7 Morrill Hall, Fargo, ND 58105-5665
May 14, 1998
Last year the profits of North Dakota's farmers, excluding those in the Red River Valley, fell 59 percent from the year before, according to a summary of 462 farms enrolled in North Dakota's Farm Business Management Education program.
"Average net income for farmers in the program was $15,190, the worst it's been in over a decade," says Andrew Swenson, farm management specialist for the North Dakota State University Extension Service. "And when inflation is taken into account, income for farmers outside the Red River Valley was as bad as it was in the early 1980s.
"Not all farms did poorly, of course. The 20 percent of farms with the highest profit averaged $69,391. But the decline in net farm income was widespread. I expected to see incomes down in the northeast, but income was down throughout the state, especially in the northwest and east central areas."
Average net income for farms in the Foster, Griggs, Barnes and Stutsman four-county area was less than $1,000—even though those farms averaged $224,000 in gross revenue. Average net farm income in the northwest was negative: farmers lost money.
Strangely enough, larger farms were just as likely to incur losses as smaller ones, says Swenson. Thirty percent of farms with more than 2,000 crop acres had a negative net farm income; they lost, on average, more than $41,000. Smaller farms suffered losses in about the same proportion: 31 percent with less than 2,000 crop acres experienced negative net farm income, losing an average of $19,000.
"Yields and prices of spring wheat, durum and barley were down significantly, but did not fall to drastically low levels by historical standards," says Swenson. "But these yields and prices, combined with direct costs 60 percent higher than in 1991, created a huge economic impact."
Profit from the major livestock enterprise, beef cow-calf, was very low at $30, though comparatively much higher than the average loss of $51 per cow in 1996.
Net farm income is the amount available for family living, taxes and investment. The decline in average net farm income from $37,272 to $15,190 in one year highlights the volatility of net farm income and the difficulty farm families can have in budgeting for family living expenses and income taxes, says Swenson. He believes low farm income has probably accelerated the trend toward working off the farm: non-farm wages and salaries averaged $9,707 last year for farmers throughout the state, and that's 13 percent more than in 1996 and 84 percent more than in 1990.
"Farm balance sheets have been deteriorating. Debt as a percent of assets has increased, on average, for the fourth consecutive year," says Swenson. "1998 will be a critical year for the survival of many farms. But unfortunately, even if 1998 is a mediocre year, the same critical situation will exist for 1999, and so on."
The state summary is available for $6, which includes handling and postage, and can be ordered from Farm Business Management, P.O. Box 6022, Bismarck, ND 58506; phone (701) 224-8390. In addition to whole-farm financial information, the summary details cost and returns of livestock and crop enterprises, including crops such as crambe, field peas and irrigated corn.
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Source: Andrew Swenson (701) 231-7379
Editor: Barry Brissman (701) 231-7866
Click here for a pdf version of this graphic.