Prairie Grains Jan.-Feb. 98 - Farm Enterprising

Issue 11
Jan./Feb. 1998
Farm Enterprising Key Tool
for Crop Management Decisions

By Tracy Sayler

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Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain
Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.

If you want to know how to improve crop returns or where to cut expenses, you might want to consider farm enterprising.
Farm enterprising is a means of evaluating gross return, direct and overhead costs, and net returns per acre of an individual crop. It is a key tool for making crop management decisions, enabling the producer to compare individual crops grown on the farm, determine breakeven yields and costs, market better, and determine long-term profitability of growing one crop compared to another.
Conducted over a period of time, enterprising can help establish trend information, such as production history, average sales prices, a breakdown of direct and overhead expenses, and yearly breakeven per acre. The trend information can also be used to analyze family living costs, make expansion decisions, for adopting new technologies, making a marketing plan, and overall risk management.
"Enterprising tells where profits and losses are. Analyzing the information, you can ask yourself where you can make adjustments. It's used a lot by lenders. The trend information can also help with rent control. People have used this to go back and negotiate with their landlords," says Greg Kalinoski, an instructor with Northland Technical College's Farm Business Management program.
A lot of people also use enterprising information from the previous year as a guide in planning the next year's expenses, since they know their breakeven and production costs," says Kalinoski.
Producers can do farm enterprising themselves with the aid of a computer, appropriate software (FBM uses Finpack), and commitment, says Kalinoski. You can get help from area lenders and extension educators, or from the FBM program, where farm enterprising is a key component. The chart below is a FBM farm enterprise analysis for wheat in 1996, on rented land in the Red River Valley.
Participation in the FBM program also allows a producer to compare average trend information to averages for similar farmers in a similar area for the same number of years.
Farm size, productivity, efficiency, and organization all play a role in a successful enterprise, says Rick Morgan, FBM instructor Moorhead, MN. A producer's experience with a particular enterprise, and ability to manage land, labor, capital and willingness to change are also important considerations.
In western Minnesota, the FBM program is coordinated by Northland Technical College, Thief River Falls, MN, ph. 218-681-0800 , or toll free 800-959-6282. The FBM program in North Dakota is coordinated by Joel Janke, ag education supervisor at the department of vocational education in Bismarck, phone 701-328-3167. The FBM program in South Dakota is coordinated by Gary Gray, program education representative, division of work force career preparation, ph. 605-773-4726.

Crop Enterprise Analysis, 1996
Minnesota and North Dakota Farm Business Mgmt. Education
Red River Valley
(Farms sorted according to Return to Overhead per Acre)
SPRING WHEAT ON CASH RENTED LAND
Average of Average of Average of All Farms Low 20% High 20% Number of fields 318 69 62 Number of Farms 176 35 35 Acres 269.56 326.22 245.41 Yield per acre (bushel) 48.83 41.32 55.93 Operators share of yield % 100.00 100.00 100.00 Value per bushel 4.27 4.02 4.54 Total product return per acre 208.74 166.18 253.82 Miscellaneous income per acre .97 .42 1.89 Gross return per acre 209.71 166.60 255.71 Direct expenses per acre Seed 13.64 13.45 14.04 Fertilizer 30.46 31.00 28.11 Crop chemicals 16.81 19.27 12.97 Crop insurance 6.96 7.35 4.91 Drying fuel 0.30 0.36 0.45 Fuel & oil 6.08 6.92 5.84 Repairs 10.38 10.11 10.28 Custom hire 3.41 3.14 3.11 Hired labor 0.47 0.42 0.46 Land rent 60.10 59.48 56.63 Machinery & Bldg. Leases 0.19 0.00 0.00 Utilities 0.05 0.00 0.00 Marketing 0.03 0.00 0.06 Operating Interest 4.96 7.05 3.41 Miscelleous 0.32 0.20 0.83 Total direct expenses per acre 154.16 158.76 141.08 Return over direct expenses/acre 55.55 7.84 114.63 Overhead expenses per acre Repairs 0.02 0.00 0.00 Custom hire 0.29 0.82 0.04 Hired labor 5.47 5.53 6.39 Machinery & Bldg. Leases 2.37 1.25 4.17 Farm insurance 2.69 3.66 2.30 Utilities 1.74 1.93 2.33 Dues & professional fees 1.11 1.04 0.96 Interest 3.62 4.75 3.13 Mach. & Bldg. Depreciation 7.02 6.81 8.24 Miscellaneous 3.30 2.85 3.80 Total overhead expenses per acre 27.64 28.64 31.37 Total listed expenses per acre 181.80 187.39 172.45 Net return per acre* 27.92 -20.80 83.26 Total direct expense per bushel 3.16 3.84 2.52 Total listed epxense per bushel 3.72 4.54 3.08 Net return per bushel 0.57 -0.50 1.49 Breakeven yield per acre 42.30 46.49 37.58 *Does not include any government payments

Copyright Prairie
Grains Magazine January 1998

Issue 11 Jan./Feb. 1998	Farm Enterprising Key Tool for Crop Management Decisions By Tracy Sayler

Library Home E-Mail Back Prairie Grains is the official publication of the Minnesota Association of Wheat Growers, North Dakota Grain Growers Association, South Dakota Wheat, Inc., and the Minnesota Barley Growers Association.	If you want to know how to improve crop returns or where to cut expenses, you might want to consider farm enterprising. Farm enterprising is a means of evaluating gross return, direct and overhead costs, and net returns per acre of an individual crop. It is a key tool for making crop management decisions, enabling the producer to compare individual crops grown on the farm, determine breakeven yields and costs, market better, and determine long-term profitability of growing one crop compared to another. Conducted over a period of time, enterprising can help establish trend information, such as production history, average sales prices, a breakdown of direct and overhead expenses, and yearly breakeven per acre. The trend information can also be used to analyze family living costs, make expansion decisions, for adopting new technologies, making a marketing plan, and overall risk management. "Enterprising tells where profits and losses are. Analyzing the information, you can ask yourself where you can make adjustments. It's used a lot by lenders. The trend information can also help with rent control. People have used this to go back and negotiate with their landlords," says Greg Kalinoski, an instructor with Northland Technical College's Farm Business Management program. A lot of people also use enterprising information from the previous year as a guide in planning the next year's expenses, since they know their breakeven and production costs," says Kalinoski. Producers can do farm enterprising themselves with the aid of a computer, appropriate software (FBM uses Finpack), and commitment, says Kalinoski. You can get help from area lenders and extension educators, or from the FBM program, where farm enterprising is a key component. The chart below is a FBM farm enterprise analysis for wheat in 1996, on rented land in the Red River Valley. Participation in the FBM program also allows a producer to compare average trend information to averages for similar farmers in a similar area for the same number of years. Farm size, productivity, efficiency, and organization all play a role in a successful enterprise, says Rick Morgan, FBM instructor Moorhead, MN. A producer's experience with a particular enterprise, and ability to manage land, labor, capital and willingness to change are also important considerations. In western Minnesota, the FBM program is coordinated by Northland Technical College, Thief River Falls, MN, ph. 218-681-0800 , or toll free 800-959-6282. The FBM program in North Dakota is coordinated by Joel Janke, ag education supervisor at the department of vocational education in Bismarck, phone 701-328-3167. The FBM program in South Dakota is coordinated by Gary Gray, program education representative, division of work force career preparation, ph. 605-773-4726. Crop Enterprise Analysis, 1996 Minnesota and North Dakota Farm Business Mgmt. Education Red River Valley (Farms sorted according to Return to Overhead per Acre) SPRING WHEAT ON CASH RENTED LAND Average of Average of Average of All Farms Low 20% High 20% Number of fields 318 69 62 Number of Farms 176 35 35 Acres 269.56 326.22 245.41 Yield per acre (bushel) 48.83 41.32 55.93 Operators share of yield % 100.00 100.00 100.00 Value per bushel 4.27 4.02 4.54 Total product return per acre 208.74 166.18 253.82 Miscellaneous income per acre .97 .42 1.89 Gross return per acre 209.71 166.60 255.71 Direct expenses per acre Seed 13.64 13.45 14.04 Fertilizer 30.46 31.00 28.11 Crop chemicals 16.81 19.27 12.97 Crop insurance 6.96 7.35 4.91 Drying fuel 0.30 0.36 0.45 Fuel & oil 6.08 6.92 5.84 Repairs 10.38 10.11 10.28 Custom hire 3.41 3.14 3.11 Hired labor 0.47 0.42 0.46 Land rent 60.10 59.48 56.63 Machinery & Bldg. Leases 0.19 0.00 0.00 Utilities 0.05 0.00 0.00 Marketing 0.03 0.00 0.06 Operating Interest 4.96 7.05 3.41 Miscelleous 0.32 0.20 0.83 Total direct expenses per acre 154.16 158.76 141.08 Return over direct expenses/acre 55.55 7.84 114.63 Overhead expenses per acre Repairs 0.02 0.00 0.00 Custom hire 0.29 0.82 0.04 Hired labor 5.47 5.53 6.39 Machinery & Bldg. Leases 2.37 1.25 4.17 Farm insurance 2.69 3.66 2.30 Utilities 1.74 1.93 2.33 Dues & professional fees 1.11 1.04 0.96 Interest 3.62 4.75 3.13 Mach. & Bldg. Depreciation 7.02 6.81 8.24 Miscellaneous 3.30 2.85 3.80 Total overhead expenses per acre 27.64 28.64 31.37 Total listed expenses per acre 181.80 187.39 172.45 Net return per acre* 27.92 -20.80 83.26 Total direct expense per bushel 3.16 3.84 2.52 Total listed epxense per bushel 3.72 4.54 3.08 Net return per bushel 0.57 -0.50 1.49 Breakeven yield per acre 42.30 46.49 37.58 *Does not include any government payments
Copyright Prairie Grains Magazine January 1998

Farm Enterprising Key Tool for Crop Management Decisions

Farm Enterprising Key Tool
for Crop Management Decisions