Farm Horizons, May 2006
2005 review: how do you compare?
By Myron Oftedahl
In 2005, a total of 2,247 farms were included in the financial analysis for the Farm Business Management Program. There were 747 farms involved from Regions 4 and 5, which covers southwest and south central Minnesota.
Income and expenses were 14 percent higher than in 2004. Corn yields for the region were an average of 184 bushels with an average price of $1.90. This was an all-time high for the region. Soybean yields were 24 percent higher than in 2004, with an average yield of 53 bushels, and an average price of $5.84.
The regions’ farm debt-to-asset ratio was 49 percent, which means that 49 percent of all the farm assets were owed to creditors. The rate of return on farm assets was 10.9 percent, with a range of .2 percent to 16.3 percent. In other words, for every dollar of assets the farm generated 10.9 cents profit. Also, out of the 747 farms, 74 were being operated as partnerships or LLCs, and 43 were set up as corporations.
If we look at some of the detail for corn on owned land, we would find that average machinery costs per acre were $81.68, total direct costs (seed, fertilizer, chemical, crop insurance, etc.) were $224.09, with a net return over labor and management of $80.01.
Soybeans on owned land show machinery costs of $66.52 per acre, total direct costs of $116.33 per acre, with a net return over labor and management of $89.68. 2005 was a good year for most farm operators.
The average farm in our region spent $555,447 in the surrounding communities in 2005. This covered custom work hired, extra labor, land rent, inputs (fuel, fertilizer, feed, repairs, etc.), interest, farm equipment, real estate and buildings, local government, and family living expenses.
These are some of the highlights of the 2005 report. How does your farm compare to these average numbers? Are there areas where you could fine tune your farming operation? If these questions have you interested, contact a Farm Business Management instructor in your area.
If you want to compare more numbers, go to www.mgt.org or www.cffm.umn.edu and go to the FINBIN link. You can look up instructors at www.mgt.org.
Have a safe and profitable 2006.
Herald Journal / Enterprise Dispatch