NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665
April 13, 2000
The average net income of Red River Valley farms enrolled in North Dakota and Minnesota's Farm Business Management Education Program was $87,000 in 1999, up from $20,600 in 1998 and $37,000 in 1997, says an agricultural economist at North Dakota State University.
Net farm income is income before self-employment and income taxes and family living expenses, explains Andrew Swenson, farm management specialist with the NDSU Extension Service. Net farm income is calculated on a per-farm basis. Because some farms are partnerships or family corporations, the net farm income must be divided among multiple operators.
"Most Red River Valley producers would no doubt agree that 1999 turned out better than expected and that the reversal was needed,"Swenson says.
Only 7 percent of farms had a negative net income in 1999, compared to nearly 40 percent in 1998, and farm debt improved for the first time in three years, Swenson says. But a significant increase in government payments was the main factor contributing to the turnaround.
"Government payments averaged $91,375 in 1999, compared to a two-year average of $28,000 for 1997 and 1998," Swenson says. "The reason for the increase was twofold: one, the level of loan deficiency payments resulting from low commodity prices, and two, the emergency federal legislation that provided market loss payments and crop loss disaster assistance."
The Farm Business Management report also shows that the size of farms in the Red River Valley continues to increase. The 211 farms featured in the 1999 report averaged 1,729 acres, of which 72 percent was cash rented. The average size of farms in the 1998 report was 1,485 acres.
"Raising spring wheat on cash-rented land showed a loss of $12 per acre, for the third consecutive year," Swenson continues. "Sugarbeets on cash rented land returned $105 per acre in 1999, but producers with cash-rented land and a joint-venture arrangement for the sugarbeet stock lost $31 per acre, on average."
Average yields of corn and soybeans on cash-rented ground were very good in 1999, at 127 and 36 bushels per acre, respectively. Even so, corn lost $17 per acre, Swenson says. In contrast, soybeans showed a $26-per-acre profit.
Swenson says the annual Farm Business Management report is designed to help Red River Valley farmers make more informed management decisions by providing measures of comparison to other farms in the area. Detailed 1999 costs and returns for each crop enterprise are included in the report. The study also might be useful to educators, bankers and consultants.
The report costs $5 plus handling and shipping and can be ordered in Minnesota by writing to Robert Bollesen at Northland Community and Technical College, Highway 1 East, Thief River Falls, MN 56701. Bollesen can be reached by telephone at (218) 681-0797. North Dakota producers interested in the report can write to Farm Business Management, P.O. Box 6022, Bismarck, ND 58506, or they can call (701) 328-3162. The report also is available via Internet at http://www.mgt.org/fbm/reports/1999/valley/valley.htm.
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Source: Andrew Swenson, (701) 231-7379
Editor: Dean Hulse, (701) 231-6136