Net farm income improved last year, but only with help from Uncle Sam

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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.

Average net farm income for North Dakota's farmers operating outside of the Red River Valley in 1998 totaled $27,700—an amount up 82% from the $15,200 they netted in 1997 but still the third lowest level in a decade. One in every four farms had negative net farm income for 1998. Those figures are from a summary of 466 farms enrolled in the ND FBM program.

Without the federal farm payments, (assistance of $20,000 to $30,000 was common for a lot of northwest MN farms) many farms in the Red River Valley and outside of the Valley would have had a net farm income loss, says Robert Bolleson, dean of management education for northwest Minnesota's FBM Program, Northland Community and Technical College, Thief River Falls, MN.

Low prices hurt producers who sold their 1998 crop, says Andrew Swenson, North Dakota State University extension farm management specialist. But the price scenario also affected those with stored grain that they produced in previous years but sold at lower prices in 1998. Stored durum was one of the reasons the northwest quarter of the state had the lowest profits in 1998, says Swenson. Also, that area of the state grows fewer acres of the crops that had record yields.

In contrast, Swenson says the east central portion of ND reversed its pattern of the past several years by posting stronger net farm income than any of the other regions. The reason for the turnaround was exceptionally good crop yields.

Beef farms averaged only slightly more than $1,000 net profit, with net income per beef cow at only $14. From 1994 through 1998, returns per beef cow averaged $3, compared to a $165 per beef cow average for the previous five-year period (1989-1993). Meanwhile, dairy farms were the most profitable in 1998, because of historically high milk prices.

When annual statistics for farms enrolled in the FBM program are analyzed, the numbers are presented in three categories: an average of all farms, the top 20%, and the bottom 20%. Bolleson says the spread between the top 20% and bottom 20% seems to be widening. He speculates that one reason for this might be interest payments on farm debt, which can take a large bite out of a thin profit margin.

The average size of the farms in the ND FBM program summary were 1,560 crop acres, and 673 pasture acreage. Average gross revenues were close to $200,000 in ND and MN.

In northwest MN, average total crop acreage of the 419 farms in the program was 656 acres, ranging from an average of 1,469 in the area that includes Pennington, Polk, and Red Lake, to 216 in Cass, Hubbard, Todd, and Wadena Counties.

Although the trend toward working off the farm continued in 1998, the rate of the trend moderated, probably because farms are getting bigger and net farm income increased relative to 1997, Swenson says. Nonfarm wages and salaries averaged $10,069 last year for farmers throughout ND ($14,256 in northwest MN). The amount of nonfarm wages and salaries in ND represents a 4% jump from 1997—and an 88% hike from the 1990 average.

The ND FBM summary is available for $6, which includes postage and handling. It can be ordered from Farm Business Management, P.O. Box 6022, Bismarck, ND 58506. The telephone number is (701) 224-8390. In addition to whole-farm financial information, these books detail costs and returns of livestock and crop enterprises. Regional summaries for western, north-central and south-central North Dakota are also available.

For more information about the northwest MN FBM Program or the 1998 FBM Summary, contact Bollesen at 1-800-959-6282 or email: bbollesen@nctc.mnscu.edu.