Farm business report summarized
Area farmers participating in the Farm Business Management Program received the summary reports of how well (or poorly) they did in 2005. The reports were part of the annual meeting held in Detroit Lakes Thursday by instructors Mark Berg and Paul...
Area farmers participating in the Farm Business Management Program received the summary reports of how well (or poorly) they did in 2005.
The reports were part of the annual meeting held in Detroit Lakes Thursday by instructors Mark Berg and Paul Ramsey.
The long-time program is overseen by Northland College of Thief River Falls.
Berg told the audience that he thinks 2006 will be an "exciting year" for producers in all commodities, although cattle prices may be entering a "holding pattern."
A detailed analysis of income and expenses will be sent shortly to area enrolled farmers. Berg said it will include dairy price projections that those producers can use to estimate revenue and expenditures.
Ron Dvergsten, Northland regional dean of Management Education, said the 51 farms in the Detroit Lakes area program did about the best of the 444 farms in Northwest Minnesota in 2005.
Dvergsten attributed that to the commodity diversity of the Detroit Lakes area farmers, especially those with crops and livestock.
The average net income for area farmers was $86,180, with outflows (family living, retirement account, health and medical, Social Security, principle payments) of $55,819.
That is drastically different than the average of the 444 farms: net income of $50,828; combined expenses of $70,597, for a deficit of $19,769.
Dvergsten said the income-expense picture varied widely throughout Northwest Minnesota, in part due to 2005 weather conditions. Farmers in Kittson, Marshall and Roseau counties recorded an average net income of $12,142 because of excess moisture.
Dvergsten said some all-grain farmers in those three counties reported six-figure losses on their 2005 income taxes. Farm Business Management instructors are working closely with them and their lenders to determine if they can continue operating this year.
The suddenly changing prices in gasoline and diesel fuel were primary factors for higher expenses in 2005. Berg said it was one-quarter to one-third higher than projected before the start of 2005 field work.
Berg said petroleum and fertilizer expenses will continue to be a very large expense in 2006.
Of the 444 farms, the average producer spent $382,420 in 2005 on their business and for family living. The average farmer had assets of nearly $830,000, while managing a debt of almost $400,000. Non-farm income of $18,000 contributed to the average operation.
Dvergsten said beef cattle prices have been a bright star for program farmers since 1999 when the net return bounced out of the red to a positive $75.77 per cow. It dropped to $6.24 per cow in 2002, but last year it was $168.99
Dvergsten says 2006 beef cattle prices are anyone's guess, and level off near the 2004 mark of $116.11.
"I don't think we'll maintain the prices we saw in 2005," informed Dvergsten.
For dairy farmers, the net return per cow was $680.51 per cow on production average 20,652 pounds.
Net returns per acre for spring wheat, corn and barley were negative in 2005, while soybeans brought $2 an acre to Northwest Minnesota farmers.
Hog producers recorded the highest net income of the 444 farms ($251,608), followed by dairy ($81,622), and a combination dairy/crop farmers ($51,550).
Crop-only farmers reported a 2005 net income of $30,856, beef/crop $30,372 and beef-only $16,650.