Summer 1995
Report Details Northwest MN Farm Performance
by Tracy Sayler, Communications Specialist: Minnesota Wheat Council
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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.
Net profit in 1994 averaged $27,900 for farmers enrolled in the northwest Minnesota Farm Business Management (FBM) program. This was down considerably from the record high in 1992 of $59,420 and the average of $33,617 in 1993, with weather the obvious culprit in the change.
That's according to the FBM financial report from last year, released this past spring by Northwest Technical College, Thief River Falls, MN.
The report analyzed farm income and expenses from 377 farms participating in FBM education throughout a 15-county area in northwest Minnesota.
Although financial data in the report is not intended to be inclusive of all farms in the region, it does give insight into the 1994 performance of Minnesota's primary wheat-producing region.
Expenses per dollar of income was 82 cents in 1994, down from 93 cents in 1993. The average farm was 40 percent in debt in 1994, compared to 41 percent in 1993. Average net worth was $280,383 in 1994, down from $307,471 in 1993.
Farm size in the northwest Minnesota FBM program decreased slightly, with 922 tillable acres in 1993 dropping to 849 in 1994. Average age of the operator was 40.7 years old, with a farming career of 17.7 years.
The most income on average was derived from sugarbeets, followed by spring wheat, milk, insurance, barley, and deficiency payments. The biggest expense was land rent, followed by fertilizer, crop chemicals, repairs, and interest.
For spring wheat on cash-rented land, average gross return (from the crop, insurance, and deficiency or disaster payments) was $147.63 per acre and total costs, $148.23 per acre, for an average net loss of 60 cents per acre. The average yield was 28.72 bushels per acre.
The average gross for the bottom 20 percent of farms was $118.44 per acre for spring wheat on rented land. With total costs averaging $167.84, net losses were $49.40 per acre.
For the top 20 percent of farms, average gross was $189.51 per acre for spring wheat on rented land. Total cost was $144.45 per acre, yielding a net return of $45.07 per acre.
So why the disparity between the top 20 percent of farms and the bottom 20 percent?
Last year, participating in federal crop insurance (especially with buy-up coverage) and qualifying for the disaster program made a significant difference, says Greg Kalinoski, FBM instructor for the area of Crookston-Red Lake Falls, MN.
"Sometimes it's things that are hard to control, such as weather, interest rates or your established ASCS (now CFSA) payment yield," says Kalinoski. "But a lot of times, marketing is a part of it. The more profitable farms are also spreading costs over more acres, keeping chemical costs down by rotating crops, watching investments and capital purchases, and taking records seriously."
To that end, farmers participate in the FBM program not only to fine-tune their budgeting and recordkeeping skills, but also to evaluate their farm enterprises.
"The analysis can show the strengths and weaknesses of your operation. Many farmers rely on the enterprise figures for evaluating their total costs and making decisions accordingly," says Kalinoski. "Enterprise analysis is becoming more critical with narrower margins."
Working in cooperation with state technical colleges and the University of Minnesota Ag Education Program, the Farm Business Management Program has 150 instructors working with farmers statewide. The cost of the program is about $500 annually. For more information, call 1-800-222-2884.