1. Keith Torgerson, NDSCS

2. Farms in the Annual Red River Valley Annual Report
FINAN, the analysis software, allows us to take a closer look at the farms in a region or state.
We can create summaries of:
Farm Size (based on Gross Income)
Type of Farm (based on 70% of gross income)
Age of Operator
Other special sorts based on location, production practices, enterprise selection and size, etc.

3. Farm Management Education Is Concerned With:
Creating an awareness of the need for accurate financial & enterprise records.
Stimulating individuals and families to establish goals and set priorities.
Developing the farm operator’s understanding of the function of management.

4. Farm Management Education Is Concerned With:
Developing fundamentals of resource management (Financial & Human).
Developing student skills in analyzing and interpreting farm business records.
Developing skills in analyzing data to improve the organization and efficiency of the farm business.

5. Ask Yourself these Questions.
How do I compare?
With my previous farm history?
With local or county information?
With area and statewide information?
Is my farm getting the financial returns that I want or need?
How do I go about making my farm business more efficient or profitable?
How can I use the benchmarking to help me accomplish my goals

6. How Should I Use the Data
Compare your financial and crop numbers to your peer group

7. Total Farm Assets
Total farm assets decreased $61,952 over last year. (Cost)
$1,319,822
$1,594,701
$1,545,551
$1,843,439
$1,956,332
$2,331,862
$2,701,713
$2,838,577
$2,777,334
$2,715,382
Should this be a table?

8. Total Farm Liabilities
Total farm liabilities decreased by $28,291 from last year which is the first time we have reduced liabilities
from the previous year
$683,852
$735,208
$755,356
$838,328
$1,016,451
$1,139,636
$1,089,305
$1,061,014
Should this be a table?

9. Net Worth Change(Cost)
This year we had a positive Net Worth change of
$79,111
$165,651
$6,849
$269,511
$198,267
$392,774
$45,911
$72,160
$21,956
$79,111
Should this be a table?

10. Farm Receipts
Gross Farm receipts increased this year by $47,277 due mainly to the excellent crop yields
$897,727
$843,024
$931,278
$1,104,412
$1,163,839
$1,122,746
$1,014,875
$885,684
$932,961
Should this be a table?

11. Government Payments This includes ARC, CRP, and CSP payments.
$36,533
$23,746
$39,737
$36,606
$22,152
$32,384
$17,082
$33,835
$35,575
Table?

12. Farm Expenses Cash farm expenses increased by $20,503 2006 $508,716
$508,716
$602,429
$718,042
$651,196
$701,797
$789,890
$850,730
$806,992
$817,498
$739,220
$759,723
Table?

13. How the $843,068 was spent including family living and income taxes
How the $843,068 was spent including family living and income taxes. The three largest expense are seed, fertilizer and rent.
Take off the side bar that says “Cash farm expenses” It’s just taking up room, and makes everything smaller

14. Net Farm Income
This is the net cash farm income after being adjusted first for inventory change and than for depreciation
This is the calculated profit for the year
If more money than indicated on net farm income is spent on family living, personal taxes, and new investments, it must be taken from inventory sales, the capital replacement dollars, new borrowings, or from off farm income. It is also calculated under the cost balance sheet.

15. Net Farm Income For Valley
Net farm income for farms in the Valley averaged $143,489 which was a increase of $54,000 form last year.
Net farm income for the low 20% of the farms averaged a negative -$31,147
Net farm income for the high 20% of the farms averaged $411,989
Net farm income for the people in the 40%-60% averaged $108,638
The increase in Net Farm income for all income groups was due to higher yields, slightly lower input costs, and a slightly higher soybean price than in 2015

16. Net Farm Income (Profit) By Year (Before Living and Taxes)
Instead of bottom table, would data labels be easier to read?

17. Crops and Feed Inventory Change
This year we had a positive inventory change of
$48,043 up approximately $30,000 from last year

18. $ Expense/$ Income
In 2016 it cost a Valley farmer about 73.5 (accrual) to make a dollar’s worth of income. The high profit farms had a ratio of In 2015 it took 78 cents (accrual) and in 2014 it took 85.8 cents (accrual). This number is the operating expense ratio and does not include interest or depreciation expense.

19. Ask Yourself these Questions.
How do I compare?
With my previous farm history?
With local or county information?
With area and statewide information?
How do I go about making my farm business more efficient or profitable? How do my operating expense ratios compare to other people?(High Profit Farms of 68.3)

20. Acres Farmed Stayed Steady

21. Farm Equipment and Building Purchases, A Good Useful Pickup is Tough to Beat.

22. Machinery and Buildings Purchased
Machinery purchased for the year was $59,921 up $7,831 from last year. Buildings purchased during the year averaged $7,969 per farm down $4,253 from last year
Average Machinery Value per crop acre was $429 compared to $455 last year

23. Non-Farm Income and Family Living Information

24. Apparent Family Living
Format the data labels as currency

25. Non Farm Income
Average Non Farm Income was $25,385 down $1,440 from last year

26. Crop Yields, Costs and Returns

27. Spring Wheat Yield
Wheat yield decreased about 4 bushels per acre from 2015

28. Spring Wheat Fertilizer Costs Per Acre
Include data labels?

29. Spring Wheat Net Return/Acre
The net return per acre of wheat on cash rented land was negative this year
2016
Average $15.18
Low 20% $119.40
High 20% $58.88

30. Spring Wheat Total List Costs

31. Soybeans Yield for 2016 was 47 bu per acre up about 5 bushels from 2015

32. Corn Yields & Net Return per Acre
Yield Net Return
bu $140.54
bu $132.49
bu $47.95
bu $196.89
bu $154.78
bu $331.42
bu $62.04
bu $77.19
bu $-23.10
bu $27.58

33. Corn Fertilizer Costs Per Acre
Data labels

34. Corn total costs on cash rented land

35. Sugar Beet Yield

36. Cost Per Acre for Sugar Beets on Cash Rented Land

37. Ratio’s

38. Current Ratio
What is the 3-d column 4?

39. Current Ratio

40. Working Capital to Gross Revenue’s
Average Farm 36.4%
Low 20% 18.8%
High 20% 46.8
40-60% 25.7%

41. Average Working Capital

42. Working Capital/Group

43. Rate of Return on Equity/Year (Cost)

44. Rate of Return on Equity/Group

45. Capital Replacement Dollars/Year decreased for each group

46. Capital Replacement Dollars/Group

47. Operating Expense Ratio/Year
Do we need 1997 and 98? Would 10 years of data be enough and give us more room?

48. Operating Expense Ratio decreased in all three profit groups

49. Net Farm Income/Year

50. Net Farm Income/Group

51. Conclusions about the ratios
Start to compare your information to the last 3 to 5 years of data.
Determine your own trend lines.
Compare your data to the area averages.
How does your business stack up?
Evaluate possible changes if needed.
Consider the following flow chart in making future business decisions

52. Flowchart for Assessing and Improving Farm Profitability
Acceptable
If both asset turnover and operating profit are at acceptable levels, then increase size
ASSET
TURNOVER
Needs
Improvement
Acceptable
Look at cost controls. Look for ways to decrease expenses without reducing revenues.
Operating
Profit Margin
Needs
Improvement
Look for ways to increase the revenues generated from existing assets.
Re-evaluate:
Thruput
Crop Mix/Product Mix
Marketing Program
Yields
Resource Use
Custom Work Enterprise
Re-evaluate:
Production Costs
Rents
Capital Spending Plans
Purchasing Practices
Family Needs
Business Organization
Financing Costs
Employment
Inventory Management
Outsourcing
Records
Control Procedures
Management’s Priorities
Look for non-performing/under-performing
assets to cull.
Re-evaluate:
Leasing versus Owning Assets
Custom Work versus Owning
Underutilized Machinery
Sharing Assets (Partnering)
Source: Purdue University

53. Where are we headed? Major increase in the use technology.
Precision agriculture
Drones
Biotechnologies (Livestock & Crops)
Internet
Find new Suppliers, products, markets
Evaluating new technologies or products
E-Commerce
Are you working with partners to use capital more efficiently?
Is your business a low cost producer?
How about value added industries???

54. Some Challenge’s For 2017 How do I cut costs without hurting my yield
How do I manage my land that is not a consistent producer.
How do I keep my landlord’s happy
Where do I get the best bang for my investment dollars
How do I maintain or increase my working capital
How do I manage my machinery costs

55. Summary Financial planning and cost cutting need specific planning
Total Costs for all of the crops has decreased the last 3 years.
Capital purchases and family living need careful thought/analysis
Cash Rents
Keep asking why
Interest rates and debt situation needs close monitoring

56. For More Information For more information in Minnesota contact
Ron Dvergsten Northland Community and Technical College
In North Dakota Call the CTE Agriculture

57. Thank You