South Dakota farm income decreased in 2013
The average farm in South Dakota experienced a decrease of nearly 40% in net farm profit in 2013 according to data compiled by farms participating with the South Dakota Center for Farm/Ranch Management. The average farm income in 2013 was $141,973 compared to the 2012 average of $236,437. The data was compiled through the statewide program that assists producers with their recordkeeping and management offered through Mitchell Technical Institute.
This decrease in net farm income comes after only a slight increase in 2012 and is below the five year average net income of $197,556. “This decrease is not necessarily a cause for concern, but rather the result of high livestock feed prices in 2013 resulting from the 2012 drought as well as a significant drop in commodity prices from last year,” says Jared Hofer, Director of Farm Management Program at Mitchell Technical Institute. Gross cash farm income of $1,061,552 showed only a slight 2% decrease from prior year. Similarly, total cash farm expense showed a 2% increase to $903,743 resulting in Net Cash Farm Income of $157,809 compared to $194,795 in 2012. Net cash farm income does not factor in changes in inventory, depreciation, or capital sales and purchases, rather it is simply the cash farm income less cash farm expenses.
The average age of participating operators was 44.4 years old with an average of 21.9 years of farming experience. Family living expense for the family averaging 3.8 members was $70,094 in 2013, which was an increase from $62,940 in 2012. The farm families showed $19,512 in non-farm income, down only slightly from prior year.
Balance sheets again showed improvement with the average increase in net worth or owner’s equity of $186,695 or 9%. Liquidity measures such as working capital and current ratio both showed a decrease from 2012 but remain strong at $400,976 and 1.96 per operation, compared to $504,207 and 2.64 in the prior year. Working capital to gross income decreased from 45.3% in 2012 to 36.7% in 2013. Other numbers of note from 2013 data include average farm assets of $2,560,658 and equity of $1,639,344 resulting in a rate of return on assets of 5.1% and return on equity of 5.7%. Repayment capacity remains adequate with $55,910 and a resulting debt service coverage ratio of 1.93 and replacement margin ratio of 1.58.
More information on the 2013 South Dakota Annual Report can be found on the South Dakota Center for Farm/Ranch Management’s website at www.sdcfrm.com or by contacting the Center at 605-995-7196 or firstname.lastname@example.org.