May 8, 2003

 

Big Differences Across State, but Average North Dakota Net Farm Income Increased in 2002

Higher crop prices and lower production costs, primarily fertilizer, fuel and interest, more than offset sharply lower government payments, lower livestock profits, and the very low yields that occurred in drought-stricken parts of North Dakota in 2002, according to a North Dakota State University agricultural economist.

On average, net farm income for North Dakota farms outside of the Red River Valley rebounded to $44,214 from $32,408 in 2001. However, profit remained below the $52,500 average during 1999-2000, according to Andrew Swenson, a farm management specialist with the NDSU Extension Service. The 2002 numbers are from 431 farms enrolled in North Dakota’s Farm Business Management Education Program sponsored by the State Board of Vocational Technical Education.

Profit varied greatly within the state by geographic region and type of farm. Net farm income flip-flopped for much of the state relative to 2001 when the southern third of the state had much better profit than north-central and parts of east-central North Dakota. In 2002, net farm income for the area most impacted by drought, roughly the southern one-third of the state lying west of Stutsman County, was cut more than one-half from about $49,000 to $23,000. Crop insurance income prevented greater loss. However, farms in north-central North Dakota doubled income from $26,000 to $52,000. Farms in the east-central area also saw a strong increase in profit. For example, average profit of 74 farms in Foster, Wells, Eddy and Stutsman counties increased from $20,000 to $56,000.

In 2001, profit was similar for different types of farms, but in 2002 crop farms were much more profitable than either beef or dairy farms. Both beef calf and milk prices suffered declines. Although yields varied throughout the state, nearly all crops had higher prices, lower per acre costs and greater profit in 2002. The crop with the largest increase in profit, on cash rented ground, was barley. It netted $36 per acre compared to a loss of $6 in 2001, not including direct government payments. Average soybean, sunflower, pinto bean and corn profits also were between $30 and $45 per acre in 2002.

The difference between high and low profit farms was the largest that the Farm Business Management Education Program has ever shown. The 20 percent of farms with the highest profit returned $136,000 on average, whereas the 20 percent of farms with the lowest profit lost $17,000 per farm. High profit farms averaged 3,572 acres in size with 2,900 crop acres, and low profit farms were 1,835 acres with 1,166 were crop acres.

The average of farms with profits in the middle 60 percent may be more representative of the typical farm, Swenson says. That’s because a few very high profit farms can greatly influence the average of all farms. In 2002, the average net farm income of farms in the middle 60 percent of profits was $34,364, about $10,000 less than the average of all farms. This amount was insufficient to cover family living expenses and taxes without the help of off-farm income, even though these farms averaged 1,500 crop acres and more than 900 pasture acres.

The state farm Business Management summary is available on the Web at www.ndfarmmanagement.com . 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.

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Source: Andrew Swenson, (701) 231-7379, aswenson@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu