Red River Valley Farm income declines in 2017
Average net farm income fell 28 percent in 2017 to $102,043 for 235 Red River Valley farms in Minnesota and North Dakota Farm Business Management Education Programs.
“However, the midpoint, or median net income, of these farms was significantly less at $53,694, or one-half that of 2016,” says Andrew Swenson, North Dakota State University Extension farm resource management specialist.
The farms averaged slightly more than 1,900 acres of cropland. The average age of farm operators was 48.
To highlight the substantial differences in farm size and income, Swenson categorized the farms by level of gross cash income: small being less than $500,000, medium being $500,000 to $1 million and large being greater than $1 million. Each level contained about one-third of the farms.
Small farms averaged $34,263 net income on 613 acres, medium-size farms averaged $48,066 net income on 1,407 acres and large farms averaged $208,818 net income on 3,420 acres.
Soybeans, corn, sugar beets and wheat accounted for 94 percent of total crop sales, led by soybeans and corn at 38 percent and 26 percent, respectively.
The decline in net farm income was driven by generally lower yields and a lower corn price.
In 2017, average soybean yield of the Red River Valley farms was 39 bushels per acre, down from 47 in 2016. Corn yield declined from 190 to 178 bushels per acre. The average soybean sales price increased to $9.06 per bushel from $8.86 in 2016, but the price received for corn dropped 31 cents to $3.02 per bushel.
Wheat was a bright spot in 2017, with stronger yields averaging 74 bushels per acres and a 15 percent increase in the sales price. Net income per acre of spring wheat on cash-rented land improved from minus $15 per acre in 2016 to $70 in 2017.
Soybean net income per acre on cash-rented land declined from $89 in 2016 to minus $3 in 2017. However, the more specialized soybean production for seed and food grade, provided positive returns of $83 and $63 per acre on cash-rented ground, respectively.
Corn net income per acre on cash-rented land dropped from $28 in 2016 to minus $27 in 2017.
Per-acre production costs were up slightly for wheat, soybeans and corn as savings in fertilizer costs were offset by increased expenditures on chemicals, fuel and repairs.
A liquidity measure, working capital to gross income, dropped from an average of 36 percent in 2016 to 30 percent in 2017. A repayment capacity measure, term debt coverage ratio, dropped from 1.67 in 2016 to 1.24 in 2017. Debt increased as the average farm borrowed $510,347 during 2017 and made principal payments of $454,285 during the same time period.