Dakota State University -- NDSU Agriculture
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North Dakota Net Farm Income Drops in 2001
The average net income for North Dakota farms outside of the Red River Valley declined by 40 percent in 2001, according to a North Dakota State University agricultural economist.
Average net income for those farms dropped to $32,400 in 2001 from $54,000 in 2000, according to Andrew Swenson, a farm management specialist with the NDSU Extension Service. The data is from 452 farms enrolled in North Dakota’s Farm Business Management Education Program sponsored by the State Board of Vocational Technical Education.
"The primary reason for the drop in net income was a reduction in government subsidies," Swenson says. Total 2001 fixed government payments to all North Dakota farms was $183 million compared to $225 million in 2000, and the emergency legislated market loss assistance payments dropped to $205 from $241 million. Also, the determination of loan deficiency payments for wheat was less beneficial to producers compared to 2000. And, unlike the previous four years, there was not a disaster program for the 2001 crop year.
"The drop in net farm income was from a combination of higher costs and lower revenue," Swenson says. He notes that total fertilizer cost per acre for wheat increased more than 20 percent compared to 2000. Also, higher chemical, repair and fuel costs more than offset lower interest expense. Beef prices took a substantial drop in the fall of 2001 before most calves had been marketed. Net return per beef cow dropped from $124 in 2000 to $93 in 2001.
Net farm income was consistent among regions in the state, excluding the Red River Valley, in 2000 but varied considerably in 2001. Farms in the southern part of the state tended to fair much better than those in the north and parts of east central North Dakota. The north central region averaged $26,000 net income per farm and the combined average of 42 farms in Wells and Foster counties was about $10,000 compared to about $60,000 per farm in Stark and Ransom counties, in the southwest and southeast, respectively.
"The main reason for those regional differences in income was wheat yields," Swenson says. "Overall, state average crop yields were good in 2001. There was a slight decrease in wheat and durum yields and a slight increase in oilseed yields. However, spring wheat and durum yields were down substantially in the northern regions, compared to 2000, but increased in the southern regions. "
Farm size continued to increase in 2001. The average acreage of all farms in the program was nearly 2,400 with about 1,650 acres of crop land and 750 acres of pasture. Crop farms averaged more than 2,000 acres of crop land. Off-farm income of farm families also continued to increase. Off-farm wages and salaries are now $13,300 per farm compared to $5,900 in 1991.
Looking forward to 2002, Swenson said he believes that yields are the main question mark regarding net farm income projections. The new six-year farm bill that will take effect in 2002 should provide total subsidies similar to the past few years. Higher loan rates, except for soybeans, and the inclusion of loan rates for pulse crops provide stronger income protection for actual production.
Total direct costs of crop production should actually be less in 2002, mainly because of a drop in nitrogen fertilizer cost. Although prices for beef cattle have dropped sharply over the past several months, it should be possible to price the 2002 beef calf crop at profitable levels. "The big uncertainty is crop yields," he says. "Sate average yields have been strong for the past few years. What will they be in 2002?"
The state farm Business Management summary is available on the website www.state.nd.us/vte/programs/ag. It can be ordered from Farm Business Management, P.O. Box 6022, Bismarck, ND 58506 for $6, which includes postage and handling. The telephone number is (701) 328-9640. Regional summaries for western, north central, and south central North Dakota, and the Red River Valley of Minnesota and North Dakota are also available. In addition to whole-farm financial information, these books detail costs and returns of livestock and crop enterprises.