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May 18, 2006 2005 North Dakota Farm Profit Varies by Region A recently published summary of North Dakota's Farm Business Management Education program showed an average 2005 net farm income of $59,607 for 430 farms outside of the Red River Valley. This average was similar to 2004, but there was much more variability between regions in 2005, according to Andrew Swenson, a farm management specialist with the North Dakota State University Extension Service. In 2004, the three Farm Business Management program regions west of the Red River Valley, which make up the summary, all averaged close to $60,000 profit per farm. In 2005, the west region had the same net farm income as the prior year, but profit in the south-central region, which encompasses the southern half of the state between the Red River Valley and the Missouri River, increased 50 percent to $91,000 per farm. Conversely, profit in the north-central region plummeted more than 40 percent to $35,000 per farm. Particularly hard hit, due to weather-induced production problems, was the eastern part of this region. The 50 farms submitting records from Cavalier, Ramsey and Towner counties averaged 2,320 acres of cropland, but only could generate $14,200 of net income per farm. “The positives in 2005 were all-time record yields for corn, soybeans, sunflowers and flax, and very strong beef prices, which provided historically high returns per beef cow,” Swenson says. “The negatives were record high input costs per acre and production problems in parts of the state. It was the third consecutive year of strong increases in production costs. Again, fuel and fertilizer were the main culprits.” Additionally, interest expense emerged as a concern in 2005. Total interest expense per farm increased from $17,810 to $20,136 because of higher interest rates and greater debt. Interest as a percent of gross revenue had declined each year from 10.5 percent in 1997 to 5.5 percent in 2004. That trend changed in 2005. The size of farms, whether measured by gross revenues or acreage, increased. Gross cash revenues averaged $335,712 and acreage averaged 2,624. Of the 2,624 acres, 805 acres was pasture land. One-fifth of the farms lost an average of $17,159 and the middle three-fifths of farms averaged $45,380 net farm income. In contrast, the most profitable one-fifth of farms achieved average net farm income of $179,053 on 4,209 acres (cropland and pasture). The low profit farms averaged 2,130 acres. Net farm income is cash revenue less cash expenses plus adjustments for inventory changes and depreciation. Income taxes and family living expenses are not used in the calculation. Net farm income represents the return to the farm family for labor, management and equity investment used in the farm business. The state farm business management summary is available on the Web at www.ndfarmmanagement.com. It can be ordered for $6 from Farm Business Management, P.O. Box 6022, Bismarck, ND 58506. The price includes postage and handling. To order by phone, call (701) 328-9640. Regional summaries for western, north-central, and south-central North Dakota, and the Red River Valley of Minnesota and North Dakota also are available. In addition to whole-farm financial information, these books detail costs and returns of livestock and crop enterprises. ### Source:
Andrew Swenson, (701) 231-7379, aswenson@ndsuext.nodak.edu |
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North Dakota State University |
