financial characteristics of north dakota farms 2005-2006can be monitored by constructing financial...
TRANSCRIPT
Agribusiness & Applied Economics Report No. 608 August 2007
Financial Characteristics ofNorth Dakota Farms
2005-2006
Andrew L. Swenson
Department of Agribusiness and Applied Economics Agricultural Experiment StationNorth Dakota State University
Fargo, ND 58105-5636
CONTACT INFORMATION
We would be happy to provide a single copy of this publication free of charge. You canaddress your inquiry to: Department of Agribusiness and Applied Economics, North DakotaState University, P.O. Box 5636, Fargo, ND, 58105-5636, Ph. 701-231-7441, Fax 701-231-7400,e-mail [email protected]. This publication is also available electronically at this website: http://agecon.lib.umn.edu/.
NDSU is an equal opportunity institution.
NOTICE:
The analyses and views reported in this paper are those of the author(s). They are not necessarilyendorsed by the Department of Agribusiness and Applied Economics or by North Dakota StateUniversity.
North Dakota State University is committed to the policy that all persons shall have equal accessto its programs, and employment without regard to race, color, creed, religion, national origin, sex, age,marital status, disability, public assistance status, veteran status, or sexual orientation.
Information on other titles in this series may be obtained from: Department of Agribusiness andApplied Economics, North Dakota State University, P.O. Box 5636, Fargo, ND 58105. Telephone: 701-231-7441, Fax: 701-231-7400, or e-mail: [email protected].
Copyright© 2007 by Swenson. All rights reserved. Readers may make verbatim copies of thisdocument for non-commercial purposes by any means, provided this copyright notice appears on all suchcopies.
TABLE OF CONTENTS
List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Source of Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Interpretation of Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Farm Classifications and Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
All Farms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Farm Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Farm Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Farm Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Cropland Tenure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Net Farm Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Debt-to-Asset Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Farmer Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Appendix: Definition of Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ii
LIST OF TABLES
Table 1. Median farm size, farm operator age, and financial factors of farms participatingin the North Dakota Farm Business Management Education Program, 1997-2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Table 2. Farm classifications and percent distribution of farm types within regions, North DakotaFarm Business Management Education Program, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Table 3. Current assets and current liabilities, quartile values for 2006, median values for2005, and 5-year average, 2001-2005, of median values, North Dakota FarmBusiness Management Education program participants. . . . . . . . . . . . . . . . . . . . . . . . . . 18
Table 4. Liquidity measures, quartile values for 2006, median values for 2005, and 5-yearaverage, 2001-2005, of median values, North Dakota Farm BusinessManagement Education Program participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Table 5. Total assets and total liabilities, quartile values for 2006, median values for 2005,and 5-year average, 2001-2005, of median values, North Dakota Farm BusinessManagement Education Program participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Table 6. Solvency measures, quartile values for 2006, median values for 2005, and 5-yearaverage, 2001-2005, of median values, North Dakota Farm BusinessManagement Education Program participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Table 7. Rate of return on assets and rate of return on equity profitability measures,quartile values for 2006, median values for 2005, and 5-year average, 2001-2005,of median values, North Dakota Farm Business Management Education programparticipants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Table 8. Operating profit margin and net farm income profitability measures, quartilevalues for 2006, median values for 2005, and 5-year average, 2001-2005, ofmedian values, North Dakota Farm Business Management Education Programparticipants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Table 9. Repayment capacity measures, quartile values for 2006, median values for 2005,and 5-year average, 2001-2005, of median values, North Dakota Farm BusinessManagement Education Program participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Table 10. Asset turnover, and operating expense and depreciation expense efficiencymeasures (as a percentage of gross farm income), quartile values for 2006,median values for 2005, and 5-year average, 2001-2005, of median values, NorthDakota Farm Business Management Education Program participants. . . . . . . . . . . . . . . 25
Table 11. Interest expense and farm income efficiency measures (as a percentage of grossfarm income), quartile values for 2006, median values for 2005, and 5-yearaverage, 2001-2005, of median values, North Dakota Farm BusinessManagement Education Program participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
iii
LIST OF FIGURES
Figure 1. Median total farm assets and liabilities by farm type, 2006, N.D. Farm Mgt Program . . . . . 8
Figure 2. Median net farm income by farm type, 1997-2006, N.D. Farm Mgt Program . . . . . . . . . . . . 8
Figure 3. Median rate of return on assets by farm type, 1997-2006, N.D. Farm Mgt Program . . . . . . . 8
Figure 4. Median asset turnover ratio by farm type, 1997-2006, N.D. Farm Mgt Program . . . . . . . . . 8
Figure 5. Median total farm assets and liabilities by farm sales, 2006, N.D. Farm Mgt Program . . . . 10
Figure 6. Median net farm income by farm sales, 1997-2006, N.D. Farm Mgt Program . . . . . . . . . . 10
Figure 7. Median term debt coverage ratio by farm sales, 1997-2006, N.D. Farm Mgt Program . . . . 10
Figure 8. Median interest expense as a percent of gross revenue, by farm sales, 1997-2006, N.D. Farm Mgt Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Figure 9. Median net farm income by crop land tenure, 1997-2006, N.D. Farm Mgt Program . . . . . 13
Figure 10. Median asset turnover ratio by crop land tenure, 1997-2006, N.D. Farm Mgt Program . . . 13
Figure 11. Median net farm income by debt-to-asset group, 1997-2006, N.D. Farm Mgt Program . . . 13
Figure 12. Median net farm income as a percent of gross revenue by debt-to-asset group, 1997-2006,N.D. Farm Mgt Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Figure 13. Median total farm assets and liabilities by farmer age, 2006, N.D. Farm Mgt Program . . . 17
Figure 14. Median net farm income by farmer age, 1997-2006, N.D. Farm Mgt Program . . . . . . . . . . 17
Figure 15. Median term debt coverage ratio by farmer age, 1997-2006, N.D. Farm Mgt Program . . . 17
Figure 16. Median net farm income as a percent of gross revenue, by farmer age, 1997-2006, N.D. Farm Mgt Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
iv
Abstract
The performance of over 500 North Dakota farms, 2005-2006, is summarized using 16 financial measures.Farms are categorized by geographic region, farm type, farm size, gross cash sales, farm tenure, net farmincome, debt-to-asset, and age of farmer to analyze relationships between financial performance and farmcharacteristics. Five-year averages, 2001-2005, and farm financial trends for the 1997-2006 period are alsopresented. In 2006, median and average acreage per farm was 1,966 and 2,386, respectively. Median andaverage cash farm revenue was $281,751 and $361,418, respectively.
Financial performance is volatile. Year-to-year changes in median net farm income within regions andfarm types averaged 50 percent from 1997 to 2006. Median net farm income in 2006 was the lowest infive years, $35,980, and ranged from $83,970 in the Red River Valley to only $689 in the west regionwhich was the lowest for any region over the 1997-2006 period. In 1999, 2000, 2003 and 2004 the rate ofreturn on equity exceeded the rate of return on assets, which indicates that debt capital was employedprofitably. Interest expense as a percent of gross revenue improved from 1997-2004, but increased in2005 and 2006 because of higher debt and interest rates.
The Red River Valley and crop farms had stronger profitability, solvency and repayment capacity from1997 to 2006 than other regions and farm types, respectively, except in 2005 when the south centralregion and livestock farms had better performance. Farms with sales less than $100,000 were over twiceas likely to have debt-to-asset higher than 70 percent than were farms with sales greater than $500,000.Farms that own some crop land, but less than 40 percent are more likely to be crop farms, farm moreacreage, have larger sales, and be more profitable. As expected, solvency and percent of crop land ownedincreased with farmer age.
Keywords: Farm financial management, farm management, farm income, liquidity, solvency,profitability, repayment capacity, financial efficiency, financial benchmarks, tenure, North Dakota.
1
INTRODUCTION
Financial statements such as the balance sheetand income statement provide a structured formatto summarize financial information so it is moremanageable for decision making. It is helpful tofurther simplify or summarize informationcontained in financial statements into keymeasures of financial performance. However, thecalculation of a financial measure can be fruitlessunless there is a meaningful basis of comparisonto evaluate the number. Two methods ofcomparison are:
Ø Past performance. The progress of a businesscan be monitored by constructing financialmeasures on a periodic basis and comparingpresent to past performance.
Ù Industry benchmarks. The average ormedian of a financial measure from severalsimilar businesses provides a good point ofreference. There are statewide farm recordprograms in some states, including NorthDakota. Each farm has its own unique aspects,so the most appropriate comparison would befarms that have similar enterprises andresources.
Whatever method of comparison is used, it isimperative that the procedures for construction offinancial statements and performance measuresare consistent over time and between farms toensure an "apples-to-apples" comparison.
The Farm Financial Standards Task Force(FFSTF), which was formed by the AmericanBankers Association in 1989, has providedrecommendations of standards for financialstatement construction and the calculation of 16measures of financial performance. Theserecommendations were adopted, in most part, bythe North Dakota Farm Business ManagementEducation Program and are the basis for thebenchmarks presented in this publication. TheAppendix has an explanation of the financialmeasures used in this study.
The purpose of this study is to provideinformation to producers, lenders, educators, andothers on the financial performance of a sampleof North Dakota farms. Table 1 lists the medianoperator age, farm size and selected financialfactors, 1997-2006. The data are from financial
summaries of farms participating in the NorthDakota Farm Business Management Educationprogram. In this study the median and upper andlower quartiles of 16 financial performancemeasures are presented for all farms in the dataset and for groupings of farms by characteristicsuch as farm type, farm size, and age of producer.The results can be used by producers and lendersto evaluate the financial performance of a farm.Also, trends can be identified and relationshipsbetween farm characteristics and financialmeasures can be analyzed. However, because ofthe small number of farms in this study, theresults should be used cautiously and only beconsidered guidelines.
SOURCE OF DATA
About 700 farms are enrolled in the NorthDakota Farm Business Management Educationprogram. Instructors educate and assist producersin record keeping and review data forcompleteness and accuracy. Instructors use theFinpack farm financial management softwareprogram to generate financial summaries. From1997-2006, the financial summaries of over 500farms each year were considered usable for thisstudy.
About 85 percent of the same farms are in thestudy from one year to the next. Annual turnoveroccurs from changes in farm managementprogram enrollment and the level of farmscompleting their records by a cutoff date.
The farms in this study are larger and the age ofthe farm operators younger than the stateaverage. In 2006, there were 30,300 farms inNorth Dakota with agricultural production of atleast $1,000. Only 9,800, or 32%, had grossreceipts greater than $100,000, whereas 87% ofthe 509 farms in this study exceed that salesvolume (median gross sales was $281,751). Thefarms in the study are more representative ofoperations that provide the primary source of netfamily income. The average age of farmoperators in this study is 45 compared to 54 forthe state average.
2
INTERPRETATION OF RESULTS
Each financial measure was calculated for eachfarm. Refer to the Appendix for definitions ofthe financial measures and an explanation ofasset valuation and accrual adjustments.
Farms were grouped by characteristics such asregion, type of farm, and size and were sorted inorder from strongest to weakest by each of the 16financial measures. The median is the midpointvalue of the financial measure: one-half of thefarms in the category had a higher value andone-half had a lower value than the median. Theupper quartile is the value that was exceededby one-fourth of the farms, and the lowerquartile is the value that was exceeded bythree-fourths of the farms. (Another definition oflower quartile is the value for which one-quarterof the farms in the category had a weaker value.)
Individual farm operators and lenders can use thisstudy for benchmarks of comparison if theirfinancial measures are calculated similarly. Forexample, a farm operator 30 years of age maycompare his/her profitability and financialefficiency with those of other young operators.Or, a lender may compare the solvency andrepayment capacity of producers who rent alltheir crop land. This study also can be used tolook at relationships and trends. What is therelationship between age of farmer and rate ofreturn on equity? How has operating profitmargin of livestock farms changed over time?
One ratio is not sufficient to make conclusionsabout the overall financial performance of a farmbusiness. For example, a crop farm may have adebt-to-asset ratio of 60%, which is worse thanthe median value of 56.3% (shown on table 7) forthe crop farm enterprise category. However,other factors such as profitability, total assets,and age of operator should also be considered.
Also, a farm can be adversely affected byextraordinary circumstances. Profitability in thelow quartile may not be reflective of managementcapability if the farm had localized bad weatherthat was not experienced by many otherproducers in the farm category.
Caution must be used when analyzing the tablesbecause a small number of farms increases thepossibility that results may not be representativeof a farm category. In this study, for 2006, thereare only 65 farms with sales less than $100,000,80 mixed livestock-crop enterprise farms, and 82farms in the west region. Performance of the RedRiver Valley region may not be representative ofthe central or northern areas of the Red RiverValley because nearly all valley farms in thestudy are from the south. Also, since 2003 therewas a lack of farms in the northern portion of thewest region. Lastly, the livestock farm type isdominated by the beef cow-calf enterprise.
There are some strong correlations between twoor more classifications, so it is difficult toassociate a financial measure with an individualfarm characteristic.
For example, the profitability of livestock, incomparison to crop farming, is reflected in farmcategories that had a disproportionate number oflivestock farms, such as the west region, farmswith greater than 40% crop land ownership, andfarms with less than $100,000 sales. Also,comparison of farms by enterprise type, farm sizeand gross sales can be affected by regionalperformance. The Red River Valley has thehighest proportion, relative to other regions, ofcrop farms, farms of less than 2,000 acres, andfarms with gross income greater than $500,000.
Table 1 shows the 10-year trends in financialperformance and farm characteristics. Table 2lists the farm characteristics and percentagedistribution for 2006 and the breakout of thesecharacteristics by region of North Dakota. Tables3 through 11 display the median and quartiles of16 financial measures by farm characteristics.Figures 1 through 16 display relationshipsbetween selected farm characteristics andfinancial measures. A summary of highlights byfarm characteristics is also presented.
3
TA
BL
E 1
. M
ED
IAN
FA
RM
SIZ
E, F
AR
M O
PER
AT
OR
AG
E, A
ND
FIN
AN
CIA
L F
AC
TO
RS
OF
FAR
MS
PAR
TIC
IPA
TIN
G IN
TH
E N
OR
TH
DA
KO
TA
FA
RM
BU
SIN
ESS
MA
NA
GE
ME
NT
ED
UC
AT
ION
PR
OG
RA
M, 1
997-
2006
.
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
Num
ber o
f Far
ms
509
520
522
513
513
532
553
539
535
560
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
---M
edia
n --
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
---
Age
of O
pera
tor
4646
4645
4444
4443
4242
Farm
Siz
e (a
cres
)1,
966
1,99
82,
002
1,99
52,
033
1,93
71,
916
1,92
11,
882
1,72
9
Gro
ss C
ash
Rev
enue
281,
751
281,
667
265,
524
247,
757
220,
781
216,
697
205,
659
190,
676
173,
972
179,
052
Tota
l Far
m A
sset
s68
8,80
268
4,18
165
2,57
561
2,43
757
5,60
654
3,86
054
9,63
652
0,09
449
9,49
648
5,09
4
Tota
l Far
m L
iabi
litie
s34
8,10
233
8,65
732
3,80
530
5,26
828
4,82
828
7,06
827
4,64
026
6,40
127
0,80
226
3,40
6
Cur
rent
Rat
io1.
21.
21.
31.
41.
31.
21.
41.
41.
21.
2
Wor
king
Cap
ital
20,6
6027
,812
35,2
6439
,712
29,0
9921
,910
36,6
1229
,643
12,0
9511
,207
Deb
t-to-
asse
t (%
)57
.554
.854
.354
.353
.355
.553
.955
.559
.458
.6
Rat
e of
Ret
urn
on F
arm
Ass
ets (
%)
4.7
4.9
6.1
7.0
5.7
4.1
7.6
8.4
4.0
2.5
Rat
e of
Ret
urn
on F
arm
Equ
ity (%
)2.
44.
36.
78.
44.
43.
27.
79.
00.
0-1
.4
Ope
ratin
g Pr
ofit
Mar
gin
(%)
12.2
12.9
15.1
17.4
14.5
12.1
20.6
21.6
11.5
8.3
Net
Far
m In
com
e35
,980
42,2
8644
,912
49,1
8138
,079
27,7
2945
,085
42,0
0919
,491
14,2
90
Term
Deb
t Cov
erag
e R
atio
1.2
1.3
1.5
1.6
1.3
1.0
1.6
1.5
0.9
0.7
Term
Deb
t & C
apita
l Rep
aym
ent M
argi
n ($
)5,
378
10,1
1018
,752
21,0
1210
,628
301
17,7
6817
,973
-2,6
80-8
,995
Ass
et T
urno
ver R
atio
0.38
0.39
0.40
0.42
0.37
0.38
0.42
0.38
0.36
0.34
Ope
ratin
g Ex
pens
e R
atio
(%)
72.5
71.1
69.2
66.8
68.8
70.9
63.3
61.2
71.9
73.3
Dep
reci
atio
n Ex
pens
e R
atio
(%)
5.6
6.0
6.0
5.9
5.6
5.9
5.3
5.7
5.7
6.0
Inte
rest
Exp
ense
Rat
io (%
)7.
26.
05.
65.
66.
67.
67.
88.
49.
69.
9
Net
Far
m In
com
e R
atio
(%)
14.2
16.0
18.6
19.6
17.3
14.0
21.7
22.4
12.7
8.1
4
FARM CLASSIFICATION AND HIGHLIGHTS
ALL FARMS
Highlights
C Some consistent trends over the past ten years, 1997-2006, for farms enrolled in the North Dakota FarmBusiness Management Education Program are:– farms are getting larger as measured by median gross revenue which increased 57%, and by median
farm assets and liabilities, which increased 42% and 32%, to $688,802 and $348,102, respectively.– farmers are getting older; the median age increased from 42 to 46.– average off-farm wages and salaries per farm household increased by two-thirds.
C Overall financial performance in 2006 was the lowest in the past five years. Median net farm income was$35,980. Good crop prices and record sugarbeet yields were not enough to offset historically high inputcosts and severe drought in the west and portions of central North Dakota.
C Financial performance, 1997-2006, was poorest in 1997 followed by 1998 because of low cattle prices,weather related production problems with small grains in 1997, low crop prices in 1998 and increasingproduction costs. Financial performance was strong in 1999 and 2000, despite very low crop prices,because of extraordinary government and crop insurance payments and higher beef prices. Also, at thetime, yields and acreage of corn, soybeans and sugarbeets were at record levels. Profit declined in 2001because of lower government subsidies and higher crop production costs with continued low commodityprices.
C Profit increased 37% in 2002 from high prices and lower production costs. Median net farm incomereached a 10-year high in 2003 at $49,181. A good wheat and barley crop, strong crop prices andlivestock profit, and disaster aid legislated in 2003, for crop losses that occurred in 2001 and 2002, allcontributed. Financial performance in 2004 was strong albeit down from 2003. High costs and poor rowcrop yields were offset by crop insurance, very high spring wheat, canola and field pea yields and verystrong beef cow-calf profit and flax prices. Profit declined in 2005 despite record corn, soybean,sunflower, and flax yields and high cattle prices. Input costs were high and portions of the state,particularly the northeast, had production problems
C Median current ratio has been relatively stable, ranging between 1.2 to 1.4 from 1997 to 2006. In 2006,the median debt-to-asset ratio, 57.5%, was the worst since 1998.
C Median rates of return on equity and assets were 4.7% and 2.4%, respectively, in 2006. In the 1997-2006period, the years that ROE exceeded ROA, which indicated that debt capital was employed profitably,were 1999, 2000, 2003, and 2004.
C Median term debt coverage ratio dropped to 1.2 in 2006 compared to the ten year high of 1.6 in 2003.
Only in 1997 and 1998 was median term debt coverage ratio below 1.0, which indicates over one-half ofthe farms were not able to make all scheduled term debt payments with farm and non-farm income.
C Interest expense as a percent gross revenue declined from 1997 to 2004 but then increased in 2006 and2005, to 7.2% and 6.0%, respectively, because of higher debt and interest rates.
C Median net farm income as a percent of gross revenue was 14.2% in 2006 and 16% in 2005. In the 1997-2006 period it was the highest, 22.4%, in 1999 and lowest, 8.1%, in 1997.
5
TABLE 2. FARM CLASSIFICATIONS AND PERCENT DISTRIBUTION OF FARM TYPES WITHIN REGIONS, NORTHDAKOTA FARM BUSINESS MANAGEMENT EDUCATION PROGRAM, 2006.
Farm Group Category Breakout by Region
Farm Group CategoryNumber of
Farms (509) PercentageRed River
ValleyNorth
CentralSouth
Central West
Region 97 177 153 82
Red River Valley 97 19.1
North Central 177 34.8
South Central 153 30.1
West 82 16.1
Farm Enterprise -----------------------percentage----------------------
Crop 335 65.8 99.0 74.0 60.1 19.5
Livestock 94 18.5 0.0 13.6 20.9 46.3
Mixed 80 15.7 1.0 12.4 19.0 34.1
Farm Sales
$99,999 or less 65 12.8 11.3 10.7 11.1 22.0
$100,000 - $249,999 160 31.4 18.6 35.0 32.7 36.6
$250,000 - $499,999 176 34.6 29.9 40.7 34.6 26.8
$500,000 or more 108 21.2 40.2 13.6 21.6 14.6
Farm Size
1,999 acres or less 258 50.7 77.3 41.2 54.2 32.9
2,000 acres or more 251 49.3 22.7 58.8 45.8 67.1
Cropland Tenure
Full tenant 102 20.0 27.8 13.6 21.1 23.8
1-20 percent owned 129 25.3 32.0 30.7 15.1 26.3
21-40 percent owned 117 23.0 27.8 20.5 27.0 16.3
41 percent or more owned 157 30.8 12.4 35.2 36.8 33.8
Farm Income
$19,999 or less 196 38.5 14.4 35.0 41.2 69.5
$20,000 - $49,999 104 20.4 15.5 25.4 20.3 15.9
$50,000 - $99,999 103 20.2 22.7 22.0 23.5 7.3
$100,000 or more 106 20.8 47.4 17.5 15.0 7.3
Debt-to-asset Ratio
0 - 40 percent 159 31.2 37.1 28.8 34.6 23.2
41 - 70 percent 184 36.1 41.2 36.7 32.0 36.6
71 percent or more 166 32.6 21.6 34.5 33.3 40.2
Farmer Age
39 years or younger 151 29.7 35.1 30.5 25.5 29.3
40 - 49 years 164 32.2 30.9 32.8 29.4 37.8
50 years or older 194 38.1 34.0 36.7 45.1 32.9
6
REGION
Farms are classified in one of four geographic regions in North Dakota, based on the location of their FarmBusiness Management program. However, farms enrolled in the Bismarck program are classified as "west or"south central" according to which side of the Missouri River the farm is located. Also, some farms that areenrolled in the Casselton and Wahpeton programs are not in the Red River Valley and are classified assouth-central. The southern area of the "west" region is better represented than the northern area. The northernarea of the Red River Valley has had little representation since 1997. Locations of North Dakota Farm BusinessManagement programs that participated in the 2006 summaries are:
Red River Valley: Wahpeton and CasseltonNorth Central: Bottineau, Devils Lake, Langdon, Minot, and RugbySouth Central: Bismarck, Carrington, Jamestown, and Napoleon West: Bismarck, Dickinson, and Glen Ullin
Highlights
C In 2006 the median farm size increased from the Red River Valley (1,329 acres, all crop land) to the westregion (2,763 acres, including pasture). Median farm size was 2,263 acres (1,809 crop acres) in the northcentral region and 1,819 acres (1,334 crop acres) for the south central region .
C Several farm characteristics are strongly related to region. Red River Valley farms are more likely to becrop farms and typically have smaller total acreage (crop land and pasture) but much larger total farmsales, assets, and liabilities than farms in other regions.
C In 2006, the incidence of livestock and mixed enterprise farms ranged from only 1% in the Red RiverValley to 80% in the west.
C Financial performance for the west region in 2006 was the worst for any region in any year over the1997-2006 period. Median net farm income plummetted to $689 from $43,987 in 2005.
C Red River Valley financial performance was the strongest of any region in 2006 and was much improvedfrom 2005. Financial performance was similar for the north central and south central regions in 2006 dueto an improvement in the north central and a sharp decline in the south central region relative to itsunusually strong performance in 2005. Median net farm income was up 71%, to $83,970, in the RedRiver Valley and 18%, to $34,777, in the north central region. It dropped 47% , to $32,576 in the southcentral region.
C Median current ratio in 2006 was 1.4 in the Red River Valley, 1.2 for the south central and 1.1 for thenorth central and west regions. Both the 2006 and the five year average, 2001-2005, median debt-to-assetranged from 49% in the Red River Valley to about 59% in the west region.
C The five-year average, 2001-2005, median rate of return on equity ranged from 9.6% in the Red RiverValley to 4.6% in the north central region. In 2005 it was 10.7% in the Red River Valley, 1.9% in thenorth central, 1.5% in the south central, and -6.0% in the west region.
C The five year average, 2001-2005, median term debt coverage ratio ranged from 1.7 in the Red RiverValley to 1.1 in the south central region. In 2006 it was highest, 2.2, in the Red River Valley and lowest,0.6, in the west region.
7
FARM ENTERPRISE
Farms were classified as “crop” if 70% or more of total sales were from crops, and “livestock” if livestock salesaccounted for 70% or more of total sales. The remaining farms were classified as “mixed”. The “livestock” farmtype is dominated by the beef cow-calf enterprise.
Highlights
C In 2006, 66% of farms were classified as crop, 18% as livestock and 16% were mixed enterprise farms.
C Nearly one-half of the west region farms were classified as livestock in 2006, compared to none in theRed River Valley, 14% in the north central and 21% in the south central regions.
C In every year, 1997-2006, crop farms were larger than livestock and mixed enterprise farms as measuredby median total assets, total liabilities, and gross income. The only year in which median net farm incomeof both livestock and mixed enterprise farms exceeded that of crop farms was in 2005. Profitability oflivestock farms was similar to crop farms in 1997 and 2001.
C Livestock farms had their best financial performance in 2005. It is the only year in the 1997-2006 periodwhere livestock farms had better solvency and rates of return on assets and equity than crop farms. Also,the median current ratio of 1.7 and operating expense (all expenses except depreciation and interest) as apercent of gross revenue, 55.8%, were the best for any farm type over the 10 year period.
C In 2006, median net farm income for crop farms increased 34%, to $53,642, but decreased 85%, to$6,151, for livestock farms and 47%, to $24,334, for mixed enterprise farms.
C The median asset turnover ratio in 2006 was 0.48 for crop farms, 0.29 for mixed enterprise farms and 0.21for livestock farms. A higher ratio for crop farms is typical.
C Livestock farms had the lowest median term debt coverage ratio, 0.7, in 2006, but the highest, 1.7, in2004 and 2005, compared to other farm types.
C In 2006, the median interest expense as a percent of gross revenue increased to 6.0% for crop farms,10.9% for livestock farms, and 10.1% for mixed enterprise farms. Every year, 1997-2006, crop farms hadthe best measure.
C In 2006, crop farms had the best performance in converting gross income into net income, 16.1%,compared to 6.0% for livestock farms. However, in 2005, livestock farms had the best, 28.2% thatoccurred during the 1996-2005 period.
8
Figu
re 1
. Med
ian
Tota
l Far
m A
sset
s an
d Li
abilit
ies
by
Farm
Typ
e, 2
006,
N.D
. Far
m M
gt P
rogr
am
010
0,00
020
0,00
030
0,00
040
0,00
050
0,00
060
0,00
070
0,00
080
0,00
0
Cro
pLi
vest
ock
Mix
ed
Ass
ets
Liab
ilitie
s
Figu
re 2
. Med
ian
Net
Far
m In
com
e by
Far
m T
ype,
19
97-2
006,
N.D
. Far
m M
gt P
rogr
am
010
,000
20,0
0030
,000
40,0
0050
,000
60,0
0070
,000
80,0
00
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Cro
pLi
vest
ock
Mix
ed
Figu
re 3
. Med
ian
Rat
e of
Ret
urn
on A
sset
s by
Far
m
Type
, 199
7-20
06, N
.D. F
arm
Mgt
Pro
gram
0246810
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Cro
pLi
vest
ock
Mix
ed
Figu
re 4
. Med
ian
Ass
et T
urno
ver
Rat
io b
y Fa
rm T
ype,
19
97-2
006,
N.D
. Far
m M
gt P
rogr
am
0.20
0.25
0.30
0.35
0.40
0.45
0.50
0.55
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Cro
p L
ives
tock
Mix
ed
9
FARM SALES
Farms were classified in one of four cash farm sales categories. Farm sales include cash receipts from crop andlivestock sales, government payments, and other farm income.
The categories were: less than $100,000$100,000 to $249,999$250,000 to 499,999$500,000 or more
Highlights
C Median farm sales were $281,751 in 2006 and average farm sales were $361,418. The percentage offarms with over $500,000 of sales has increased from 6% to 21% over the past 10 years.
C Gross sales are correlated to region and farm type. In 2006, 40% of Red River Valley farms had sales inexcess of $500,000, compared to 15% in the west region. Also, crop farms were five times more likely tohave sales in excess of $500,000 than were livestock farms.
C As expected, young farmers typically have lower sales than older farmers. However, farmers between theages of 40 and 49 are more likely to have farm sales greater than $500,000 than farmers 50 years andolder.
C A strong relationship between gross sales and financial performance is typical. However, in 2006, farmswith $100,000 to $249,999 sales had a lower median current ratio, rates of return on assets and equity,operating profit margin, term debt coverage ratio, and net farm income as a percent of gross revenue thanfarms with sales less than $100,000.
C In 2006, median net farm income declined 58%, to $5,563, for farms with less than $100,000 sales, and
55%, to $14,107, for farms with sales $100,000 to $249,999, but increased 6%, to $60,175, for farms withsales $250,000 to $499,999, and 17%, to $119,008, for farms with sales greater than $500,000.
C Farms with low sales typically have higher debt-to-asset. The five-year average, 2001-2005, median debt-to-asset was 62.1%, 58.8%, 51.6%, and 46.3% for the lowest to highest farm sale groups, respectively.
C Typically, repayment capacity is directly related to amount of sales. The five-year average, 2001-2005,median term debt coverage ratio was 1.2, 1.2, 1.5, and 1.9 for the lowest to highest farm sale categories,respectively. Only in 1997 and 2005 did farms with less than $100,000 sales have better repaymentcapacity than both farm groups between $100,000 and $500,000 sales.
C From 1997-2006, farms with sales under $100,000 had the best operating expense as percent of grossrevenue, but the worst interest expense ratio, and usually the worst depreciation expense ratio.
10
Figu
re 5
. Med
ian
Tota
l Far
m A
sset
s an
d Li
abilit
ies
by F
arm
Sa
les,
200
6, N
.D. F
arm
Mgt
Pro
gram
020
0,00
040
0,00
060
0,00
080
0,00
01,
000,
000
1,20
0,00
01,
400,
000
1,60
0,00
01,
800,
000
$99
,999
or
less
$10
0,00
0-$2
49,9
99 $
250,
000-
$499
,999
$50
0,00
0 or
mor
e
Ass
ets
Liab
ilitie
s
Figu
re 6
. Med
ian
Net F
arm
Inco
me
by F
arm
Sal
es, 1
997-
2006
, N.
D. F
arm
Mgt
Pro
gram
0
50,0
00
100,
000
150,
000
200,
000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
$99
,999
or
less
$10
0,00
0-$2
49,9
99
$25
0,00
0-$4
99,9
99 $
500,
000
or m
ore
Figu
re 7
. Med
ian
Term
Deb
t Cov
erag
e Ra
tio b
y Fa
rm S
ales
, 19
97-2
006,
N.D
. Far
m M
gt P
rogr
am
0
0.51
1.52
2.53
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
$99
,999
or l
ess
$10
0,00
0-$2
49,9
99
$25
0,00
0-$4
99,9
99 $
500,
000
or m
ore
Figu
re 8
. Med
ian
Inte
rest
Exp
ense
as
a Pe
rcen
t of G
ross
Re
venu
e, b
y Fa
rm S
ales
, 199
7-20
06, N
.D. F
arm
Mgt
Pro
gram
024681012141618
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
$99
,999
or l
ess
$10
0,00
0-$2
49,9
99
$25
0,00
0-$4
99,9
99 $
500,
000
or m
ore
11
FARM SIZE
Both crop and pasture acres were included in determining farm size.
Farm size categories were: 1,999 acres or less 2,000 acres or more
Highlights
C Because of less pasture land and more productive crop land only one-fourth of the Red River Valleyfarms were larger than 2,000 acres, compared to two-thirds of west region farms and about one-half offarms in the central regions.
C From 1999 to 2006, mixed enterprise farms were slightly more likely to be larger than 2,000 acres thanwere crop or livestock farms.
C In 2006, less than one-third of farmers under 40 years old operated more than 2,000 acres compared to
two-thirds of farmers between 40 and 49 years old and one-half of farmers over 50 years or older.
C As expected, farms with greater than 2,000 acres have greater assets, liabilities, sales and profitabilitythan smaller farms. Larger farms also have better solvency.
C In 2006, median net farm income was $27,950 for farms with less than 2,000 acres and $49,897 for farmswith more than 2,000 acres. Historically, farms with more than 2,000 acres have about twice the netincome of the small farm group.
C Farms larger than 2,000 acres had a similar median current ratio as smaller farms in 2006, 1.2, but slightlybetter for the five year 2001-2005 average, 1.4 to 1.3, respectively.
C In 2006, median debt-to-asset was 60.1% for farms with less than 2,000 acres and 53.4% for larger farms.
C Median term debt coverage ratio is typically better for farms with more than 2,000 acres than for smallerfarms, but was the same, 1.15, in 2006. Although smaller acreage farms generate less farm cash income,they tend to have more non-farm income than larger farms.
C Financial efficiency measures of farm size groups tend to be similar. This indicates that greaterprofitability of farms larger than 2,000 acres is due to larger sales volume and/or greater operator laborefficiencies not lower operating expenses per dollar of sales.
12
CROPLAND TENURE
This is a classification of the portion of crop land that is rented. Four categories were used.
Full tenant 1-20 percent owned 21-40 percent owned 41 percent or over owned
Highlights:
C Ownership of crop land is less likely in the Red River Valley. In 2006, only four out of ten of Red RiverValley farms owned more than 20% of the crop land they operated, compared to one-half of west regionfarms and about 60% of farms in the central regions.
C Crop land ownership increases with age. In 2006, farmers 50 years or older were over twice as likely toown more than 40% of their crop land were young farmers. Four of ten young farmers rented all of theircrop land, compared to one of ten farmers 50 years or older.
C Operators of livestock and mixed enterprise farms own a greater portion of their crop land than cropfarms. One-half of livestock farms and over one-third of mixed enterprise farms own more than 40% ofthe crop land that they operate, compared to one-fourth of crop farms.
C Interestingly, small farms (less than 2,000 acres) were more likely to either own no crop land or to ownmore than 40% of crop land than were large farms (more than 2,000 acres).
C Farms that own some land, but not a lot, are typically the most profitable. Farms in the 1 to 20% crop landownership category, followed by farms with 20-40% crop land ownership, are also most likely to be cropfarms, farm more acreage, and have larger sales.
C During 1997 to 2006 there is no clear relationship between current ratio and land tenure except that farmswith greater than 40% crop land ownership tend to have a slightly better median current ratio.
C Farms with greater than 40% crop land ownership typically have better solvency than other crop landownership groups. The five-year average, 2001-2005, median debt-to-asset ratio was 61.2% for farmswith no crop land ownership compared to 49.1% for farms with crop land ownership greater than 40%.One reason could be that older, more established farmers own a greater portion of their crop land.
C In 2006, median net farm income ranged from $58,022 for farms with 1 to 20% crop land ownership to$23,537 for farms that rent all crop land.
C Typically, the lower profit of farms with greater than 40% crop land ownership, compared to farms with 1to 40% crop land ownership, is associated with the fact these farms are more likely to also be in livestock,low sales, and small size farm categories and less likely to be in the Red River Region.
C Farms with a smaller proportion of crop land ownership have fewer land assets and land interest costs andtherefore have higher asset turnover ratios and lower interest expense as a percent of gross revenue.
13
Figu
re 9
. Med
ian
Net
Far
m In
com
e by
Cro
p La
nd T
enur
e,
1997
-200
6, N
.D. F
arm
Mgt
Pro
gram
0
10,0
0020
,000
30,0
0040
,000
50,0
0060
,000
70,0
0080
,000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Ful
l ten
ant
1-2
0 pe
rcen
t own
ed
21-4
0 pe
rcen
t ow
ned
41 p
erce
nt o
r ove
r ow
ned
Figu
re 1
0. M
edia
n A
sset
Tur
nove
r Ra
tio b
y Cr
op L
and
Tenu
re, 1
997-
2006
, N.D
. Far
m M
gt P
roga
m
0.20
0.30
0.40
0.50
0.60
0.70
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Ful
l ten
ant
1-2
0 pe
rcen
t own
ed
21-4
0 pe
rce
nt o
wne
d 4
1 per
cent
or o
ver o
wned
Figu
re 1
1. M
edia
n Ne
t Far
m In
com
e by
Deb
t-to
-Ass
et G
roup
, 19
97-2
006,
N.D
. Far
m M
gt P
rogr
am
010
,000
20,0
0030
,000
40,0
0050
,000
60,0
0070
,000
80,0
0090
,000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
0-4
0 pe
rcen
t 4
1-70
per
cent
71 p
erce
nt o
r mor
e
Figu
re 1
2. M
edia
n N
et F
arm
Inco
me
as a
Per
cent
of G
ross
Re
venu
e by
Dep
t-to-
Ass
et G
roup
, 199
7-20
06,
N.D.
Far
m M
gt P
rogr
am
051015202530
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
0-4
0 pe
rcen
t 4
1-70
per
cent
71 p
erce
nt o
r mor
e
14
NET FARM INCOME
Four levels of net farm income were used to group farms.
$19,999 or less$20,000 - $49,999$50,000 - $99,999$100,000 or more
Highlights
C Farm profit is volatile. Year-to-year changes in median net farm income within regions and farm typesaveraged 50% over the past 10 years. Volatility is less when all farms are grouped together. Statewide, themedian net farm income has declined 15%, 6%, and 9% in the years 2006, 2005, and 2004, respectively.
C The highest median net farm income in the 1997-2006 period was $49,181 in 2003 and the lowest was$14,290 in 1997. It was $35,980 in 2006.
C The Red River Valley region had the highest median net farm income every year from 1997 to 2006,except for 1998 and 2005. In 2006, nearly one-half of Red River Valley farms exceeded $100,000 netfarm income while over 70% of west region farms had net farm income less than $20,000.
C Typically, crop farms have been more profitable than livestock farms. In 2006, over one-half of cropfarms had net farm income greater than $50,000 compared to 18% of livestock farms. Two-thirds oflivestock farms earned less than $20,000.
C The typical strong associations between net farm income and farm sales and farm size were greatlyreduced in 1997.
C In 2006, 63% of farms with sales greater than $250,000 had net farm income greater than $50,000. Over70% of farms with less than $100,000 sales and 56% of farms with sales $100,000 to $249,999 earnedless than $20,000.
C In 2006, one-half of farms larger than 2,000 acres had net farm income greater than $50,000, compared toone-third of smaller farms.
C From 1999 to 2006, farmers 40 to 49 years old had higher median net farm income than farmers that wereyounger or older. However, in 1997 and 1998, farmers less than 40 years old had the highest median netfarm income.
C Solvency, liquidity, repayment capacity, and financial efficiency were strongly correlated with net farm
income.
C In 2001, low-debt farms (less than 40% debt-to-asset) were five times more likely to have net farmincome in excess of $50,000 than high-debt farms (greater than 70% debt). In other years, 1997-2006,low-debt farms were three to four times more likely to have net farm income greater than $50,000.
15
DEBT-TO-ASSET RATIO
Three ranges of debt-to-asset ratio were used to group farms.
0 - 40 percent41 - 70 percent71 percent or more
Highlights
C Median debt-to-asset was 57.5% in 2006 after ranging from 53.3% to 55.5% between the years 1999 to2005.
C Red River Valley farms, crop farms, large farms (greater than 2,000 acres) and farms with high sales(greater than $500,000 sales) nearly always had lower median debt-to-asset than other regions, farmtypes, farm size and farm sales groups, respectively, during the years 1997-2006.
C There is a strong inverse relationship between level of debt and liquidity, repayment capacity,profitability and financial efficiency measures. As debt-to-asset increases, these measures deteriorate.
C In 2006, farms in the low, medium and high debt-to-asset categories had median current ratios of 3.1, 1.1and 0.9; term debt coverage ratios of 2.7, 1.1 and 0.6; interest expense as a percent of gross revenue of3.8, 7.6 and 10.3; and net farm income as percent of gross revenue of 24.1, 14.2 and 3.3, respectively.
C In 2006, farms with sales less than $100,000 are over twice as likely to be in the high debt groupcompared to farms with sales greater than $500,000.
C As expected, percent debt-to-asset tended to decrease as age of farmer increased.
C Median net farm income for the low, medium, and high debt-to-asset categories in 2006 was $75,755,$35,883 and $4,507, respectively.
C In 2006, 4 out of 10 farms with low debt had net farm income greater than $100,000 compared to onlyone out of 25 high-debt farms.
16
FARMER AGE
Three groups were used to classify farms by age of operator:
39 years or less40 - 49 years50 years or older
Highlights
C In 2006, 30% of farm operators were under 40 years old and 32% were 40 to 49 years old. The percent offarmers 50 and older has steadily increased from 19% in 1996 to 38% in 2006.
C Prior to 1999, the age of farmers tended to increase slightly from east to west, but from 1999 to 2006 theage distribution of farm operators has been similar for all regions.
C Farmers in the middle age group have typically had more total farm assets and liabilities, higher grosssales, larger farms and been more profitable than the younger or older age groups. However, in 2006, themedian net farm income was $32,664 for farmers less than 40 years old, $35,883 for farmers 40-49 yearsold, and $42,770 for farmers older than 50 years.
C Median total assets were lowest, 1997-2006, for farm operators less than 40 years old and were mostoften the greatest for farmers between 40 and 49 years old. However, median total assets of the older agegroup of farmers (50 years and older) is close to the asset level of the middle age group.
C As expected, as the age of the farm operator increases there is a higher percent of crop land owned, andthe percent of farm debt tends to decrease. In 2006, median debt-to-asset was 67.8% for farmers less than40 years old, 58.6% for farmers in the 40 to 49 age group and 45.7% for farmers 50 or older.
C The five-year average, 2001-2005, median current ratio was 1.3 for all age groups.
C In each year, 1997-2006, the young age group of farmers employed assets more efficiently than farmers50 and older. The young group had better median measures of ROA, ROE, asset turnover and net farmincome as percent of gross revenue despite having much fewer total assets and higher debt-to-asset.
17
Figu
re 1
3. M
edia
n To
tal F
arm
Ass
ets
and
Liab
ilitie
s by
Fa
rmer
Age
, 200
6, N
.D. F
arm
Mgt
Pro
gram
0
200,
000
400,
000
600,
000
800,
000
1,00
0,00
0
39
year
s or
youn
ger
40-
49 y
ears
50
year
s or
olde
r
Ass
ets
Liab
ilitie
s
Figu
re 1
4. M
edia
n Ne
t Far
m In
com
e by
Far
mer
Age
, 19
97-2
006,
N.D
. Far
m M
gt P
rogr
am
010
,000
20,0
0030
,000
40,0
0050
,000
60,0
0070
,000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
39
year
s or
you
nger
40-
49 y
ears
50
year
s or
olde
r
Figu
re 1
5. M
edia
n Te
rm D
ebt C
over
age
by F
arm
er A
ge,
1997
-200
6, N
.D. F
arm
Mgt
Pro
gram
0.50
0.70
0.90
1.10
1.30
1.50
1.70
1.90
2.10
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
39
year
s or
you
nger
40-
49 y
ears
50
year
s or
old
er
Figu
re 1
6. M
edia
n N
et F
arm
Inco
me
as a
Per
cent
of
Gro
ss R
even
ue b
y Fa
rmer
Age
, 199
7-20
06,
N.D
. Far
m M
gt P
rogr
am
051015202530
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
39
year
s or
you
nger
40-
49 y
ears
50
year
s or
old
er
18
TA
BL
E 3
. C
UR
RE
NT
ASS
ET
S A
ND
CU
RR
EN
T L
IAB
ILIT
IES,
QU
AR
TIL
E V
AL
UE
S FO
R 2
006,
ME
DIA
N V
AL
UE
S FO
R 2
005,
AN
D 5
-YE
AR
AV
ER
AG
E, 2
001-
2005
, OF
ME
DIA
N V
AL
UE
S,
NO
RT
H D
AK
OT
A F
AR
M B
USI
NE
SS M
AN
AG
EM
EN
T E
DU
CA
TIO
N P
RO
GR
AM
PA
RT
ICIP
AN
TS.
Farm
Gro
up
200
6
A
vera
ge o
f
2006
A
vera
ge o
fU
pper
Qua
rtile
Low
erQ
uart
ileM
edia
n20
05M
edia
n20
01-2
005
Med
ians
Upp
erQ
uart
ileL
ower
Qua
rtile
Med
ian
2005
Med
ian
2001
-200
5M
edia
ns
Cur
rent
Far
m A
sset
s ($)
C
urre
nt F
arm
Lia
bilit
ies (
$)A
ll Fa
rms
314,
413
90,7
7818
3,27
618
4,33
916
1,99
559
,552
231,
262
124,
239
126,
498
108,
116
Reg
ion
Red
Riv
er V
alle
y48
8,95
315
0,54
928
5,62
722
6,49
824
8,83
871
,502
305,
826
158,
452
144,
090
142,
948
Nor
th C
entra
l28
0,52
397
,949
172,
885
158,
090
150,
162
70,6
4622
2,42
412
9,80
313
4,52
010
5,55
2 S
outh
Cen
tral
318,
461
98,6
7917
8,12
019
5,53
615
6,01
764
,419
240,
411
115,
529
118,
121
101,
932
Wes
t26
4,00
056
,698
127,
451
181,
631
146,
036
31,5
0918
5,03
292
,751
91,9
7283
,729
Farm
Ent
erpr
ise
Cro
p37
3,56
311
6,54
222
4,78
120
8,39
618
6,63
177
,691
248,
653
148,
695
151,
529
123,
872
Liv
esto
ck20
2,15
256
,389
107,
449
119,
507
104,
471
32,6
8613
0,34
969
,586
61,4
7964
,425
Mix
ed28
8,13
775
,777
140,
598
163,
506
146,
312
56,5
9521
9,26
812
0,15
511
7,13
910
2,86
7Fa
rm S
ales
$99
,999
or l
ess
74,7
8519
,046
43,6
4653
,951
45,9
3715
,611
65,5
3932
,159
36,7
9633
,594
$10
0,00
0-$2
49,9
9916
2,77
466
,795
107,
449
115,
450
116,
345
56,2
1913
3,40
297
,154
97,0
7887
,860
$25
0,00
-$49
9,99
930
7,18
417
0,67
324
5,38
322
7,52
822
0,31
387
,724
244,
943
159,
373
168,
163
149,
686
$50
0,00
0 or
mor
e71
5,58
333
3,85
349
4,04
047
2,67
046
5,97
118
3,67
851
8,25
332
8,29
528
0,22
226
4,05
7Fa
rm S
ize
1,9
99 a
cres
or l
ess
206,
100
54,3
8011
2,88
711
6,26
210
3,57
138
,083
146,
452
94,0
3791
,945
78,9
40 2
,000
acr
es o
r mor
e45
5,98
716
6,42
226
2,36
826
7,84
922
8,23
710
8,69
032
3,04
618
5,06
918
0,68
914
4,30
3C
ropl
and
Tenu
re F
ull t
enan
t19
0,72
139
,211
96,7
2111
4,97
711
6,26
424
,411
120,
282
68,3
5881
,338
77,8
09
1-2
0 pe
rcen
t ow
ned
409,
332
149,
504
251,
694
224,
925
200,
827
116,
696
339,
140
192,
575
182,
137
147,
354
21-
40 p
erce
nt o
wne
d43
2,63
513
3,03
624
5,52
323
7,48
420
2,88
392
,803
265,
760
157,
609
152,
134
124,
681
41
perc
ent o
r mor
e ow
ned
286,
899
76,1
4116
0,75
916
1,75
914
2,81
540
,096
177,
147
108,
833
96,3
7884
,451
Net
Far
m In
com
e $
19,9
99 o
r les
s17
4,50
043
,514
93,0
4199
,135
85,7
4345
,027
199,
500
102,
853
104,
926
85,2
46 $
20,0
00-$
49,9
9925
3,35
690
,001
150,
236
144,
421
130,
094
61,3
6616
6,40
711
1,07
210
3,65
889
,093
$50
,000
-$99
,999
310,
798
164,
366
244,
799
221,
993
206,
142
75,6
6824
2,21
113
6,44
414
6,26
712
2,93
3 $
100,
000
or m
ore
671,
275
303,
703
472,
279
410,
907
391,
098
96,5
9138
3,93
518
8,31
019
4,13
715
6,97
3D
ebt-t
o-A
sset
Rat
io
0-4
0 pe
rcen
t45
5,80
015
0,98
327
4,63
926
9,21
023
0,26
428
,833
155,
489
82,4
0991
,918
72,4
87 4
1-70
per
cent
314,
015
97,2
6019
2,21
018
1,91
416
7,98
285
,248
258,
204
160,
399
141,
721
124,
228
71
perc
ent o
r mor
e22
8,93
457
,299
119,
793
119,
902
109,
649
79,8
4225
5,85
714
1,32
313
8,01
212
4,54
6Fa
rmer
Age
39
year
s or y
oung
er21
0,18
654
,046
116,
605
138,
182
131,
485
34,5
8916
2,53
195
,607
103,
861
88,4
20 4
0-49
yea
rs44
9,11
111
9,25
425
4,41
622
8,88
720
7,74
210
2,95
534
5,73
218
3,92
615
9,78
513
2,40
5 5
0 ye
ars o
r old
er32
2,02
811
1,47
820
3,71
618
6,07
115
4,36
551
,410
203,
451
123,
168
111,
086
93,3
66
191919
TA
BL
E 4
. L
IQU
IDIT
Y M
EA
SUR
ES,
QU
AR
TIL
E V
AL
UE
S FO
R 2
006,
ME
DIA
N V
AL
UE
S FO
R 2
005,
AN
D 5
-YE
AR
AV
ER
AG
E, 2
001-
2005
, OF
ME
DIA
N V
AL
UE
S, N
OR
TH
DA
KO
TA
FA
RM
BU
SIN
ESS
MA
NA
GE
ME
NT
ED
UC
AT
ION
PR
OG
RA
M P
AR
TIC
IPA
NT
S.
200
6
A
vera
ge o
f
200
6
Ave
rage
of
Farm
Gro
upU
pper
Qua
rtile
Low
erQ
uart
ileM
edia
n 20
05M
edia
n20
01-2
005
Med
ians
Upp
erQ
uart
ileL
ower
Qua
rtile
M
edia
n20
05M
edia
n20
01-2
005
Med
ians
Cur
rent
Rat
ioW
orki
ng C
apita
l($)
All
Farm
s 2.
10.
91.
21.
21.
310
3,50
5-1
2,79
520
,660
27,8
1230
,759
Reg
ion
Red
Riv
er V
alle
y2.
41.
11.
41.
21.
421
3,70
18,
747
54,1
3927
,649
59,8
13 N
orth
Cen
tral
1.9
0.9
1.1
1.1
1.2
88,1
09-1
4,54
215
,951
14,3
2324
,249
Sou
th C
entra
l1.
80.
91.
21.
41.
312
9,19
0-1
5,51
721
,538
49,3
3129
,869
Wes
t2.
00.
81.
11.
41.
480
,011
-29,
227
9,26
630
,157
30,3
65Fa
rm E
nter
pris
e C
rop
2.1
0.9
1.2
1.1
1.3
131,
854
-13,
955
23,5
7519
,974
32,7
93 L
ives
tock
2.1
0.9
1.3
1.7
1.5
82,8
55-4
,445
17,7
0445
,509
30,5
17 M
ixed
1.8
0.9
1.2
1.3
1.3
90,3
56-1
7,81
515
,618
34,0
1029
,429
Farm
Sal
es $
99,9
99 o
r les
s1.
70.
81.
31.
21.
327
,144
-6,8
338,
498
11,5
1010
,547
$10
0,00
0-$2
49,9
991.
70.
81.
11.
21.
351
,929
-21,
035
7,50
223
,091
24,4
67 $
250,
000-
$499
,999
2.3
1.0
1.2
1.2
1.3
143,
156
-7,4
2954
,188
43,6
8053
,838
$50
0,00
0 or
mor
e2.
31.
01.
31.
41.
533
1,85
8-1
3,92
490
,314
116,
298
138,
571
Farm
Siz
e 1
,999
acr
es o
r les
s2.
00.
91.
21.
21.
369
,431
-10,
634
15,2
0616
,951
18,3
56 2
,000
acr
es o
r mor
e2.
10.
91.
21.
31.
414
7,25
7-1
9,03
639
,317
58,0
0156
,430
Cro
plan
d Te
nure
Ful
l ten
ant
2.3
0.9
1.2
1.2
1.3
65,1
90-8
,630
8,62
217
,317
18,7
59
1-2
0 pe
rcen
t ow
ned
1.7
0.9
1.1
1.1
1.2
93,7
14-2
7,79
622
,274
27,7
0536
,956
21-
40 p
erce
nt o
wne
d1.
80.
91.
21.
31.
316
9,72
0-1
2,30
830
,942
43,5
5839
,545
41
perc
ent o
r mor
e ow
ned
2.6
0.9
1.3
1.4
1.4
125,
009
-9,0
7027
,144
41,8
9835
,757
Net
Far
m In
com
e $
19,9
99 o
r les
s1.
30.
60.
90.
91.
014
,618
-52,
019
-12,
448
-10,
516
-2,7
90 $
20,0
00-$
49,9
991.
71.
01.
21.
31.
361
,420
-1,4
5421
,264
24,4
4224
,011
$50
,000
-$99
,999
2.6
1.0
1.3
1.3
1.5
137,
760
7,85
654
,238
53,6
3062
,351
$10
0,00
0 or
mor
e3.
91.
32.
02.
42.
239
0,56
786
,514
213,
815
189,
125
178,
421
Deb
t-to-
Ass
et R
atio
0
-40
perc
ent
6.9
1.7
3.1
2.6
2.9
327,
184
61,4
3415
3,73
714
6,93
213
4,22
0 4
1-70
per
cent
1.5
0.9
1.1
1.2
1.3
65,9
34-6
,967
18,8
1121
,084
30,0
78 7
1 pe
rcen
t or m
ore
1.1
0.6
0.9
0.9
0.9
13,0
67-5
3,87
2-1
2,99
6-1
0,33
6-5
,573
Farm
er A
ge 3
9 ye
ars o
r you
nger
1.8
0.9
1.2
1.2
1.3
63,5
63-6
,867
14,3
9820
,103
25,1
91 4
0-49
yea
rs1.
70.
81.
11.
21.
398
,661
-39,
056
15,7
7826
,541
38,5
20 5
0 ye
ars o
r old
er3.
41.
01.
31.
41.
314
6,96
4-6
,627
39,7
7549
,460
34,5
72
20
TA
BL
E 5
. T
OT
AL
ASS
ET
S A
ND
TO
TA
L L
IAB
ILIT
IES,
QU
AR
TIL
E V
AL
UE
S FO
R 2
006,
ME
DIA
N V
AL
UE
S FO
R 2
005,
AN
D 5
-YE
AR
AV
ER
AG
E, 2
001-
2005
, OF
ME
DIA
N V
AL
UE
S, N
OR
TH
DA
KO
TA
FA
RM
BU
SIN
ESS
MA
NA
GE
ME
NT
ED
UC
AT
ION
PR
OG
RA
M P
AR
TIC
IPA
NT
S.
2
006
A
vera
ge o
f
200
6
Ave
rage
of
Farm
Gro
upU
pper
Qua
rtile
Low
erQ
uart
ileM
edia
n20
05M
edia
n20
01-2
005
Med
ians
Upp
erQ
uart
ileL
ower
Qua
rtile
Med
ian
2005
Med
ian
2001
-200
5M
edia
ns
Tot
al F
arm
Ass
ets(
$)T
otal
Far
m L
iabi
litie
s($)
All
Farm
s
1,15
4,57
844
0,13
068
8,80
268
4,18
161
3,73
219
6,57
856
0,22
634
8,10
233
8,65
730
7,92
5R
egio
n R
ed R
iver
Val
ley
1,68
1,04
549
3,61
71,
009,
853
928,
659
889,
561
215,
048
656,
023
420,
597
400,
423
384,
013
Nor
th C
entra
l1,
078,
123
466,
898
688,
852
661,
748
594,
454
211,
331
535,
310
367,
556
351,
886
309,
012
Sou
th C
entra
l1,
149,
371
446,
141
644,
343
665,
104
566,
601
188,
802
538,
322
306,
355
314,
473
290,
536
Wes
t96
7,61
228
1,50
155
9,48
960
3,13
055
1,00
216
2,59
152
3,30
930
2,91
328
7,61
026
8,13
2Fa
rm E
nter
pris
e C
rop
1,34
0,98
546
6,57
978
9,56
976
6,39
667
4,71
021
3,67
860
0,90
437
6,13
638
2,24
932
6,60
5 L
ives
tock
770,
798
334,
406
550,
431
561,
814
508,
678
152,
302
421,
390
235,
266
237,
024
254,
561
Mix
ed99
8,52
641
6,70
563
0,91
261
5,17
456
6,53
920
4,19
555
7,20
935
7,03
631
5,89
629
3,84
6Fa
rm S
ales
$99
,999
or l
ess
376,
698
144,
788
244,
162
255,
559
274,
742
75,0
0020
9,60
315
2,13
214
4,61
214
8,10
7 $
100,
000-
$249
,999
638,
058
364,
547
499,
887
498,
149
477,
545
170,
179
378,
891
270,
119
273,
118
258,
179
$25
0,00
0-$4
99,9
991,
122,
071
607,
955
827,
894
805,
400
790,
476
230,
083
561,
355
402,
796
377,
075
368,
860
$50
0,00
0 or
mor
e2,
024,
898
1,18
7,30
41,
626,
844
1,53
1,85
21,
428,
776
468,
925
1,11
0,76
473
7,77
565
0,00
362
9,87
5Fa
rm S
ize
1,9
99 a
cres
or l
ess
728,
085
289,
490
478,
038
479,
742
452,
003
136,
347
399,
663
239,
395
254,
198
232,
197
2,0
00 a
cres
or m
ore
1,54
0,58
867
5,43
61,
018,
755
945,
647
821,
924
298,
337
726,
064
471,
003
438,
961
392,
587
Cro
plan
d Te
nure
Ful
l ten
ant
620,
927
165,
594
302,
211
366,
277
337,
815
75,8
5534
1,16
416
3,66
320
3,35
820
1,61
7
1-2
0 pe
rcen
t ow
ned
1,14
6,64
550
9,83
974
2,83
571
7,10
764
9,49
029
1,06
663
4,06
541
9,91
041
6,82
436
2,51
1 2
1-40
per
cent
ow
ned
1,54
2,74
454
2,76
587
4,73
488
0,97
375
2,52
725
1,47
766
9,22
640
4,99
239
5,91
736
3,19
4 4
1 pe
rcen
t or m
ore
owne
d1,
211,
127
518,
661
780,
224
743,
357
699,
779
194,
448
510,
377
345,
475
320,
873
307,
435
Net
Far
m In
com
e $
19,9
99 o
r les
s78
1,41
731
4,52
848
9,45
348
2,30
342
3,34
916
4,14
853
8,43
331
0,69
031
4,48
926
0,96
6 $
20,0
00-$
49,9
9981
7,62
839
7,82
057
1,22
155
4,67
350
3,02
019
2,54
744
0,42
029
7,69
929
4,58
727
6,47
8 $
50,0
00-$
99,9
991,
108,
354
558,
339
780,
224
771,
040
723,
505
205,
454
567,
691
355,
640
369,
041
322,
447
$10
0,00
0 or
mor
e1,
978,
375
1,08
9,83
31,
519,
757
1,38
8,03
61,
268,
647
292,
744
737,
462
467,
682
438,
336
421,
813
Deb
t-to-
Ass
et R
atio
0
-40
perc
ent
1,63
0,98
857
6,79
61,
017,
694
987,
321
845,
977
100,
477
343,
322
200,
366
211,
448
176,
086
41-
70 p
erce
nt1,
147,
327
455,
218
713,
898
686,
905
652,
182
232,
705
632,
081
399,
358
395,
496
353,
062
71
perc
ent o
r mor
e78
6,09
932
3,53
952
7,35
051
8,62
944
9,69
029
3,35
364
0,79
645
0,67
344
7,13
438
9,41
2Fa
rmer
Age
39
year
s or y
oung
er70
7,22
723
8,02
247
3,30
650
0,96
245
8,16
212
9,34
946
2,11
429
7,83
331
2,89
426
4,06
4 4
0-49
yea
rs1,
499,
579
541,
304
860,
456
828,
742
725,
296
289,
035
747,
813
462,
444
416,
329
372,
112
50
year
s or o
lder
1,33
0,28
252
9,23
481
4,84
376
3,73
665
9,91
516
8,29
852
4,75
730
7,19
530
3,24
927
6,72
1
21
TA
BL
E 6
. SO
LV
EN
CY
ME
ASU
RE
S, Q
UA
RT
ILE
VA
LU
ES
FOR
200
6, M
ED
IAN
VA
LU
ES
FOR
200
5, A
ND
5-Y
EA
R A
VE
RA
GE
, 200
1-20
05, O
F M
ED
IAN
VA
LU
ES,
NO
RT
H D
AK
OT
A F
AR
M B
USI
NE
SSM
AN
AG
EM
EN
T E
DU
CA
TIO
N P
RO
GR
AM
PA
RT
ICIP
AN
TS.
200
6
Ave
rage
of
200
6
Ave
rage
of
200
6
Ave
rage
of
Farm
Gro
upU
pper
Qua
rtile
Low
erQ
uart
ileM
edia
n20
05M
edia
n20
01-2
005
Med
ians
Upp
erQ
uart
ileL
ower
Qua
rtile
Med
ian
2005
Med
ian
200
1-20
05M
edia
nsU
pper
Qua
rtile
Low
erQ
uart
ileM
edia
n20
05M
edia
n20
01-2
005
Med
ians
Deb
t-to
-Ass
et (%
)E
quity
-to-
Ass
et (%
)D
ebt-
to-E
quity
All
Farm
sR
egio
n
Red
Riv
er V
alle
y
Nor
th C
entra
l
Sout
h C
entra
l
Wes
tFa
rm E
nter
pris
e
Cro
p
Live
stoc
k
Mix
edFa
rm S
ales
$9
9,99
9 or
less
$1
00,0
00-$
249,
999
$2
50,0
00-$
499,
999
$5
00,0
00 o
r mor
eFa
rm S
ize
1,
999
acre
s or l
ess
2,
000
acre
s or m
ore
Cro
plan
d Te
nure
Fu
ll te
nant
1
-20
perc
ent o
wne
d
21-4
0 pe
rcen
t ow
ned
41
per
cent
or m
ore
owne
dN
et F
arm
Inco
me
$1
9,99
9 or
less
$2
0,00
0-$4
9,99
9
$50,
000-
$99,
999
$1
00,0
00 o
r mor
eD
ebt-t
o-A
sset
Rat
io
0-4
0 pe
rcen
t
41-7
0 pe
rcen
t
71 p
erce
nt o
r mor
eFa
rmer
Age
39
yea
rs o
r you
nger
40
-49
year
s
50 y
ears
or o
lder
34.9
34.5
36.2
33.0
41.8
33.9
35.8
45.5
47.0
42.2
29.4
34.0
36.8
33.7
37.2
39.5
33.2
27.5
54.9
40.9
30.8
21.9
13.7
49.0
77.3
46.6
39.8
23.8
76.6
63.5
77.1
76.1
83.6
76.1
74.7
82.4
82.3
80.9
75.2
62.7
78.8
72.9
79.5
79.6
72.7
73.9
86.6
72.6
73.6
51.9
33.5
62.6
94.4
83.6
78.1
63.6
57.5
49.3
58.1
56.3
59.8
56.3
57.5
62.7
69.2
61.8
52.6
51.7
60.1
53.5
63.3
59.7
57.4
50.9
72.4
57.6
50.4
35.7
26.6
57.4
83.0
67.8
58.6
45.7
54.8
52.3
56.6
52.9
58.4
54.6
52.7
58.3
66.2
60.4
51.0
47.8
60.4
50.4
63.0
58.2
56.2
47.2
69.0
57.8
50.2
36.0
24.1
56.1
82.8
67.1
55.1
42.5
54.4
48.8
56.5
53.7
58.6
52.4
57.6
58.3
62.1
58.8
51.6
46.3
58.9
50.8
61.2
56.5
53.7
49.1
69.8
58.5
48.9
38.0
24.7
55.3
83.5
63.6
53.7
46.9
65.1
65.5
63.8
67.0
58.2
66.1
64.2
54.5
53.0
57.8
70.6
66.0
63.2
66.3
62.8
60.5
66.8
72.5
45.1
59.1
69.2
78.1
86.3
51.0
22.7
53.4
60.2
76.2
23.4
36.5
22.9
23.9
16.4
23.9
25.3
17.6
17.7
19.1
24.8
37.3
21.2
27.1
20.5
20.4
27.3
26.1
13.4
27.4
26.4
48.1
66.5
37.4 5.6
16.4
21.9
36.4
42.5
50.7
41.9
43.7
40.2
43.7
42.5
37.3
30.8
38.2
47.4
48.3
39.9
46.5
36.7
40.3
42.6
49.1
27.6
42.4
49.6
64.3
73.4
42.6
17.0
32.2
41.4
54.3
45.2
47.7
43.4
47.1
41.6
45.4
47.3
41.7
33.8
39.6
49.0
52.2
39.6
49.6
37.0
41.8
43.8
52.8
31.0
42.2
49.8
64.0
75.9
43.9
17.2
32.9
44.9
57.5
45.6
51.2
43.5
46.3
41.4
47.6
42.4
41.7
37.9
41.2
48.4
53.7
41.1
49.2
38.8
43.5
46.3
50.9
30.2
41.5
51.1
62.0
75.3
44.7
16.5
36.4
46.3
53.1
0.5
0.5
0.6
0.5
0.7
0.5
0.6
0.8
0.9
0.7
0.4
0.5
0.6
0.5
0.6
0.7
0.5
0.4
1.2
0.7
0.4
0.3
0.2
1.0
3.4
0.9
0.7
0.3
3.3
1.7
3.4
3.2
5.1
3.2
3.0
4.7
4.6
4.2
3.0
1.7
3.7
2.7
3.9
3.9
2.7
2.8
6.5
2.6
2.8
1.1
0.5
1.7
16.9 5.1
3.6
1.7
1.4
1.0
1.4
1.3
1.5
1.3
1.4
1.7
2.2
1.6
1.1
1.1
1.5
1.2
1.7
1.5
1.3
1.0
2.6
1.4
1.0
0.6
0.4
1.3
4.9
2.1
1.4
0.8
1.2
1.1
1.3
1.1
1.4
1.2
1.1
1.4
2.0
1.5
1.0
0.9
1.5
1.0
1.7
1.4
1.3
0.9
2.2
1.4
1.0
0.6
0.3
1.3
4.8
2.0
1.2
0.7
1.2
1.0
1.3
1.2
1.4
1.1
1.4
1.4
1.6
1.4
1.1
0.9
1.4
1.0
1.6
1.3
1.2
1.0
2.3
1.4
1.0
0.6
0.3
1.2
5.0
1.8
1.2
0.9
22
TA
BL
E 7
. R
AT
E O
F R
ET
UR
N O
N A
SSE
TS
AN
D R
AT
E O
F R
ET
UR
N O
N E
QU
ITY
PR
OFI
TA
BIL
ITY
ME
ASU
RE
S, Q
UA
RT
ILE
VA
LU
ES
FOR
200
6, M
ED
IAN
VA
LU
ES
FOR
200
5, A
ND
5-
YE
AR
AV
ER
AG
E, 2
001-
2005
, OF
ME
DIA
N V
AL
UE
S N
OR
TH
DA
KO
TA
FA
RM
BU
SIN
ESS
MA
NA
GE
ME
NT
ED
UC
AT
ION
PR
OG
RA
M P
AR
TIC
IPA
NT
S.
2006
A
vera
ge o
f
2
006
A
vera
ge o
f
Farm
Gro
upU
pper
Q
uart
ileL
ower
Qua
rtile
M
edia
n20
05M
edia
n20
01-2
005
Med
ians
Upp
er
Qua
rtile
Low
er
Qua
rtile
M
edia
n20
05M
edia
n20
01-2
005
Med
ians
R
etur
n on
Far
m A
sset
s(%
)R
etur
n on
Equ
ity(%
)
All
Farm
s
9.1
-0.3
4.7
4.9
5.6
11.5
-8.2
2.4
4.3
5.4
Reg
ion
Red
Riv
er V
alle
y14
.35.
99.
23.
97.
620
.74.
710
.72.
39.
6 N
orth
Cen
tral
8.7
1.0
4.4
3.0
5.0
10.2
-5.0
1.9
1.0
4.6
Sou
th C
entra
l7.
7-1
.04.
27.
15.
310
.5-1
1.0
1.5
9.1
5.4
Wes
t3.
5-6
.7-0
.66.
85.
01.
1-2
9.5
-6.0
7.7
4.8
Farm
Ent
erpr
ise
Cro
p11
.41.
76.
64.
06.
315
.4-2
.56.
52.
36.
6 L
ives
tock
4.1
-3.5
0.5
7.2
4.8
2.8
-17.
2-5
.39.
74.
1 M
ixed
5.7
-2.9
2.7
5.9
4.5
6.2
-11.
40.
07.
23.
9Fa
rm S
ales
$99
,999
or l
ess
6.9
-2.5
1.4
3.0
2.0
8.3
-15.
40.
02.
1-1
.3 $
100,
000-
$249
,999
6.5
-4.1
1.3
5.3
4.8
6.4
-18.
8-1
.23.
54.
2 $
250,
000-
$499
,999
9.9
1.8
5.9
5.1
6.5
11.8
-2.4
5.7
5.0
6.9
$50
0,00
0 or
mor
e11
.43.
17.
15.
17.
817
.40.
28.
54.
99.
8Fa
rm S
ize
1,9
99 a
cres
or l
ess
10.5
-1.4
5.0
4.0
4.7
13.4
-9.3
2.1
2.3
3.9
2,0
00 a
cres
or m
ore
8.5
0.6
4.4
6.2
6.3
10.3
-6.2
2.7
6.8
6.8
Cro
plan
d Te
nure
Ful
l ten
ant
15.3
-2.4
5.8
6.0
5.8
24.5
-17.
71.
55.
55.
9
1-2
0 pe
rcen
t ow
ned
10.8
0.6
6.2
5.0
6.5
13.5
-6.4
6.1
4.8
7.7
21-
40 p
erce
nt o
wne
d9.
90.
65.
24.
15.
811
.5-7
.83.
82.
65.
4 4
1 pe
rcen
t or m
ore
owne
d6.
40.
12.
95.
34.
96.
9-7
.51.
05.
04.
3N
et F
arm
Inco
me
$19
,999
or l
ess
0.6
-6.9
-1.9
-1.5
-1.1
-4.9
-41.
4-1
3.9
-10.
7-9
.2 $
20,0
00-$
49,9
997.
43.
65.
14.
44.
98.
50.
02.
23.
03.
9 $
50,0
00-$
99,9
9911
.05.
47.
67.
98.
514
.54.
18.
59.
510
.8 $
100,
000
or m
ore
14.4
8.5
11.1
11.4
12.0
20.7
9.4
15.8
16.1
16.7
Deb
t-to-
Ass
et R
atio
0
-40
perc
ent
9.9
2.6
6.6
5.2
6.6
11.5
1.5
6.7
5.6
6.9
41-
70 p
erce
nt9.
40.
95.
15.
26.
013
.3-5
.53.
24.
96.
3 7
1 pe
rcen
t or m
ore
7.0
-6.1
0.8
3.7
3.2
4.8
-49.
0-9
.10.
0-0
.7Fa
rmer
Age
39
year
s or y
oung
er13
.3-0
.45.
97.
46.
824
.4-8
.76.
29.
48.
7 4
0-49
yea
rs8.
5-0
.84.
44.
35.
910
.7-1
0.1
0.7
2.8
6.3
50
year
s or o
lder
8.3
0.2
4.1
4.5
4.4
9.0
-6.0
2.2
3.6
3.3
23
TA
BL
E 8
. O
PER
AT
ING
PR
OFI
T M
AR
GIN
AN
D N
ET
FA
RM
INC
OM
E P
RO
FIT
AB
ILIT
Y M
EA
SUR
ES,
QU
AR
TIL
E V
AL
UE
S FO
R 2
006,
ME
DIA
N V
AL
UE
S FO
R 2
005,
AN
D 5
-YE
AR
AV
ER
AG
E, 2
001-
2005
, OF
ME
DIA
N V
AL
UE
S, N
OR
TH
DA
KO
TA
FA
RM
BU
SIN
ESS
MA
NA
GE
ME
NT
PR
OG
RA
M P
AR
TIC
IPA
NT
S.
Farm
Gro
up
200
6
A
vera
ge o
f
200
6
Ave
rage
of
Upp
erQ
uart
ileL
ower
Qua
rtile
Med
ian
2005
Med
ian
2001
-200
5M
edia
nsU
pper
Qua
rtile
Low
erQ
uart
ileM
edia
n20
05M
edia
n20
01-2
005
Med
ians
Ope
ratin
g Pr
ofit
Mar
gin(
%)
Net
Far
m In
com
e($)
All
Farm
s 21
.1-1
.112
.212
.914
.481
,166
1,60
635
,980
42,2
8640
,437
Reg
ion
Red
Riv
er V
alle
y27
.412
.519
.78.
616
.116
6,43
942
,759
83,9
7049
,088
69,7
84 N
orth
Cen
tral
20.7
3.3
12.1
7.3
13.1
75,7
5511
,159
34,7
7729
,520
37,6
66 S
outh
Cen
tral
18.9
-4.5
11.1
18.2
14.2
72,8
0753
832
,576
61,0
3939
,014
Wes
t11
.5-2
1.3
-1.7
17.4
14.1
35,2
55-1
9,11
668
943
,987
35,2
47Fa
rm E
nter
pris
e C
rop
21.8
3.7
13.2
8.7
13.4
112,
691
15,0
0053
,642
40,0
1350
,464
Liv
esto
ck17
.5-1
3.8
2.7
24.5
17.6
37,5
06-8
,322
6,15
141
,190
28,7
32 M
ixed
18.7
-10.
79.
618
.313
.945
,083
-14,
523
24,3
3445
,826
32,9
19Fa
rm S
ales
$99
,999
or l
ess
20.3
-9.3
8.8
14.7
9.8
25,0
11-6
,236
5,56
313
,209
11,1
72 $
100,
000-
$249
,999
16.4
-12.
54.
913
.013
.640
,978
-9,1
9114
,107
31,2
6731
,226
$25
0,00
0-$4
99,9
9922
.65.
613
.612
.315
.599
,093
22,0
7460
,175
56,5
8559
,816
$50
0,00
0 or
mor
e23
.56.
915
.112
.916
.920
5,67
348
,927
119,
008
101,
555
132,
384
Farm
Siz
e 1
,999
acr
es o
r les
s21
.7-3
.912
.29.
712
.567
,152
1,44
927
,950
25,6
1927
,898
2,0
00 a
cres
or m
ore
20.4
1.2
12.1
15.1
16.1
107,
837
4,39
549
,897
65,9
7357
,361
Cro
plan
d Te
nure
Ful
l ten
ant
20.2
-6.6
7.7
9.9
10.7
54,6
8466
023
,537
32,0
0730
,698
1
-20
perc
ent o
wne
d19
.21.
412
.110
.413
.195
,294
11,1
5958
,022
52,7
9653
,056
21-
40 p
erce
nt o
wne
d20
.71.
613
.411
.314
.312
7,70
812
,250
45,6
8945
,614
47,7
31 4
1 pe
rcen
t or m
ore
owne
d24
.00.
312
.518
.217
.867
,573
-956
28,1
6845
,320
36,9
45N
et F
arm
Inco
me
$19
,999
or l
ess
1.6
-20.
1-6
.4-3
.2-2
.96,
397
-25,
578
-6,6
9447
91,
710
$20
,000
-$49
,999
17.5
8.4
13.0
10.3
13.2
42,6
2028
,149
34,2
6233
,563
33,4
90 $
50,0
00-$
99,9
9922
.712
.516
.517
.819
.979
,633
59,4
6469
,108
71,2
9569
,202
$10
0,00
0 or
mor
e29
.619
.924
.723
.626
.022
4,33
212
2,36
615
6,32
914
7,15
314
6,33
1D
ebt-t
o-A
sset
Rat
io
0-4
0 pe
rcen
t26
.99.
018
.915
.118
.413
4,94
337
,279
75,7
5570
,525
69,3
88 4
1-70
per
cent
19.5
3.4
12.5
13.5
15.5
73,6
4911
,295
35,8
8346
,319
44,9
64 7
1 pe
rcen
t or m
ore
13.8
-13.
41.
48.
47.
536
,628
-20,
892
4,50
720
,475
18,0
40Fa
rmer
Age
39
year
s or y
oung
er22
.6-1
.713
.814
.615
.265
,698
3,75
032
,664
39,2
8836
,703
40-
49 y
ears
18.6
-2.0
9.3
10.9
14.0
90,8
12-3
,978
35,8
8347
,234
51,1
26 5
0 ye
ars o
r old
er21
.70.
912
.912
.913
.793
,226
6,95
442
,770
44,4
3535
,841
24
TA
BL
E 9
. R
EPA
YM
EN
T C
APA
CIT
Y M
EA
SUR
ES,
QU
AR
TIL
E V
AL
UE
S FO
R 2
006,
ME
DIA
N V
AL
UE
S FO
R 2
005,
AN
D 5
-YE
AR
AV
ER
AG
E, 2
001-
2005
, OF
ME
DIA
N V
AL
UE
S, N
OR
TH
DA
KO
TA
FA
RM
BU
SIN
ESS
MA
NA
GE
ME
NT
ED
UC
AT
ION
PR
OG
RA
M P
AR
TIC
IPA
NT
S.
Farm
Gro
up
20
06
Ave
rage
of
2
006
A
vera
ge o
fU
pper
Qua
rtile
Low
erQ
uart
ile
Med
ian
2005
Med
ian
2001
-200
5M
edia
nsU
pper
Qua
rtile
Low
erQ
uart
ile
Med
ian
2005
Med
ian
2001
-200
5M
edia
ns
Ter
m D
ebt C
over
age
Rat
io
T
erm
Deb
t and
Cap
ital
Rep
aym
ent M
argi
n($)
A
ll Fa
rms
2.26
0.45
1.15
1.33
1.36
50,9
00-2
3,81
65,
378
10,1
1012
,161
Reg
ion
R
ed R
iver
Val
ley
4.14
1.40
2.16
1.33
1.66
98,0
2410
,923
52,3
1482
629
,982
N
orth
Cen
tral
2.02
0.43
1.13
0.91
1.13
38,6
36-2
4,74
85,
123
-3,7
693,
742
S
outh
Cen
tral
2.57
0.42
1.13
1.87
1.52
46,0
68-2
3,92
72,
895
26,6
7716
,814
W
est
1.12
-0.0
60.
561.
551.
311,
701
-54,
364
-14,
432
19,8
9310
,385
Far
m E
nter
pris
e
Cro
p2.
840.
581.
521.
101.
4265
,407
-18,
663
17,6
162,
744
15,5
50
Liv
esto
ck1.
660.
250.
791.
661.
3315
,598
-24,
256
-5,1
3016
,788
9,23
6
Mix
ed1.
470.
020.
711.
521.
2611
,560
-43,
404
-12,
464
14,1
428,
637
Far
m S
ales
$
99,9
99 o
r les
s2.
330.
520.
991.
371.
1615
,120
-13,
682
-367
6,50
32,
387
$
100,
000-
$249
,999
1.78
0.12
0.73
1.21
1.17
17,3
34-3
1,30
8-9
,126
7,51
76,
080
$
250,
000-
$499
,999
2.29
0.69
1.44
1.23
1.45
59,4
73-1
9,28
417
,214
11,9
3022
,330
$
500,
000
or m
ore
3.16
0.75
1.59
1.76
1.85
123,
680
-33,
284
56,0
9344
,244
61,9
06 F
arm
Siz
e
1,9
99 a
cres
or l
ess
2.64
0.52
1.15
1.20
1.27
40,5
35-1
8,19
03,
441
5,27
97,
043
2
,000
acr
es o
r mor
e2.
090.
411.
151.
481.
4659
,467
-38,
351
7,34
523
,741
21,7
03 C
ropl
and
Tenu
re
Ful
l ten
ant
4.62
0.53
1.55
1.45
1.39
40,4
00-1
1,87
512
,359
9,91
57,
763
1-2
0 pe
rcen
t ow
ned
2.20
0.55
1.15
1.27
1.34
53,8
58-2
3,92
77,
395
10,8
5913
,567
2
1-40
per
cent
ow
ned
2.10
0.47
1.20
1.27
1.40
71,6
10-2
4,07
910
,652
8,92
116
,422
4
1 pe
rcen
t or m
ore
owne
d2.
060.
441.
021.
321.
3240
,369
-25,
618
146
12,6
1012
,546
Net
Far
m In
com
e
$19
,999
or l
ess
0.81
-0.3
50.
350.
490.
51-5
,303
-55,
043
-24,
003
-22,
197
-15,
571
$
20,0
00-$
49,9
991.
790.
711.
151.
091.
1618
,818
-14,
837
6,22
52,
461
5,57
5
$50
,000
-$99
,999
2.43
1.08
1.66
1.54
1.70
52,2
813,
974
29,8
8926
,068
30,5
74
$10
0,00
0 or
mor
e6.
131.
942.
962.
842.
8017
4,66
668
,558
103,
283
105,
372
96,2
11 D
ebt-t
o-A
sset
Rat
io
0
-40
perc
ent
6.72
1.47
2.68
2.24
2.59
117,
748
13,9
3354
,233
39,8
1441
,373
4
1-70
per
cent
1.96
0.48
1.09
1.21
1.30
44,4
17-2
3,35
13,
063
8,06
211
,859
7
1 pe
rcen
t or m
ore
1.15
-0.0
20.
580.
870.
823,
503
-52,
419
-19,
824
-6,1
60-7
,710
Far
mer
Age
3
9 ye
ars o
r you
nger
2.65
0.57
1.29
1.40
1.40
40,1
63-1
3,14
68,
022
10,5
1312
,109
4
0-49
yea
rs1.
890.
230.
971.
171.
3146
,093
-42,
698
-854
6,23
213
,842
5
0 ye
ars o
r old
er2.
640.
531.
271.
411.
3361
,123
-20,
749
11,1
0414
,428
11,4
70
25
TA
BL
E 1
0. A
SSE
T T
UR
NO
VE
R A
ND
OPE
RA
TIN
G E
XPE
NSE
AN
D D
EPR
EC
IAT
ION
EX
PEN
SE E
FFIC
IEN
CY
ME
ASU
RE
S (A
S A
PE
RC
EN
TA
GE
OF
GR
OSS
FA
RM
INC
OM
E),
QU
AR
TIL
EV
AL
UE
S FO
R 2
006,
ME
DIA
N V
AL
UE
S FO
R 2
005,
AN
D 5
-YE
AR
AV
ER
AG
E, 2
001-
2005
, OF
ME
DIA
N V
AL
UE
S, F
AR
M B
USI
NE
SS M
AN
AG
EM
EN
T E
DU
CA
TIO
N P
RO
GR
AM
PAR
TIC
IPA
NT
S.
20
06
A
vera
ge o
f
2
006
Ave
rage
of
200
6
A
vera
ge o
f
Farm
Gro
upU
pper
Qua
rtile
Low
erQ
uart
ileM
edia
n20
05M
edia
n20
01-2
005
Med
ians
Upp
erQ
uart
ileL
ower
Qua
rtile
Med
ian
2005
Med
ian
2001
-200
5M
edia
nsU
pper
Qua
rtile
Low
erQ
uart
ileM
edia
n20
05M
edia
n20
01-2
005
Med
ians
Ass
et T
urno
ver
Ope
ratin
g E
xpen
se(%
)D
epre
ciat
ion
Exp
ense
(%)
All
Farm
s.5
8.2
7.3
8.3
9.3
963
.181
.972
.571
.169
.43.
49.
75.
66.
05.
9R
egio
n R
ed R
iver
Val
ley
.71
.40
.53
.41
.47
60.4
76.4
67.7
76.2
70.1
3.6
7.3
5.1
5.4
5.4
Nor
th C
entra
l.5
7.2
7.3
9.3
9.3
963
.681
.672
.676
.270
.22.
98.
24.
95.
85.
2 S
outh
Cen
tral
.57
.25
.38
.42
.38
64.3
83.5
72.6
65.7
68.7
3.4
11.2
6.7
6.4
7.0
Wes
t.3
6.2
0.2
7.3
4.3
267
.589
.979
.062
.366
.73.
816
.08.
77.
17.
0Fa
rm E
nter
pris
e C
rop
.67
.36
.48
.45
.47
63.7
80.4
71.9
75.3
70.6
3.4
8.0
5.1
5.8
5.7
Liv
esto
ck.2
9.1
6.2
1.3
0.2
657
.586
.873
.455
.863
.21.
717
.410
.26.
76.
6 M
ixed
.39
.24
.29
.36
.33
63.8
84.3
76.1
65.1
68.9
1.4
11.5
6.0
6.1
6.6
Farm
Sal
es $
99,9
99 o
r les
s.5
0.1
6.2
4.2
9.2
453
.679
.865
.860
.563
.00.
214
.47.
36.
56.
7 $
100,
000-
$249
,999
.46
.22
.31
.36
.36
65.5
88.5
76.5
69.0
68.8
3.2
11.1
5.9
5.9
5.7
$25
0,00
0-$4
99,9
99.6
1.2
9.4
3.4
4.4
463
.678
.772
.173
.069
.73.
48.
45.
45.
96.
0 $
500,
000
or m
ore
.63
.38
.47
.45
.48
64.9
80.6
73.6
73.4
71.6
3.6
8.3
5.6
6.2
5.8
Farm
Siz
e 1
,999
acr
es o
r les
s.6
3.2
5.3
8.3
8.3
861
.781
.670
.672
.469
.23.
09.
45.
55.
95.
9 2
,000
acr
es o
r mor
e.5
4.2
7.3
9.4
0.4
065
.382
.174
.070
.369
.43.
410
.15.
76.
05.
9C
ropl
and
Tenu
re F
ull t
enan
t1.
00.3
4.6
0.5
5.5
663
.384
.773
.072
.971
.61.
89.
55.
05.
25.
7
1-2
0 pe
rcen
t ow
ned
.67
.42
.55
.53
.52
67.0
81.0
75.3
74.6
72.7
3.7
7.1
5.0
5.2
5.4
21-
40 p
erce
nt o
wne
d.5
1.3
2.4
1.3
8.3
963
.881
.372
.172
.670
.13.
48.
95.
56.
35.
7 4
1 pe
rcen
t or m
ore
owne
d.3
3.1
9.2
6.2
8.2
758
.581
.970
.864
.464
.03.
411
.57.
26.
66.
4N
et F
arm
Inco
me
$19
,999
or l
ess
.44
.20
.29
.36
.32
74.8
94.7
84.1
86.7
82.4
3.7
13.5
7.9
6.6
7.4
$20
,000
-$49
,999
.67
.27
.39
.38
.38
63.0
77.7
71.2
71.3
69.4
2.8
8.9
5.5
5.9
5.3
$50
,000
-$99
,999
.64
.34
.48
.41
.43
63.9
74.7
70.0
68.0
65.2
3.1
7.1
4.4
5.4
5.4
$10
0,00
0 or
mor
e.6
1.3
6.4
7.4
5.4
656
.968
.862
.663
.361
.63.
47.
75.
05.
75.
4D
ebt-t
o-A
sset
Rat
io
0-4
0 pe
rcen
t.4
7.2
5.3
4.3
6.3
559
.575
.465
.267
.864
.63.
511
.06.
57.
16.
7 4
1-70
per
cent
.58
.27
.39
.39
.40
63.8
78.9
72.1
70.6
68.5
3.5
9.5
5.5
5.6
5.3
71
perc
ent o
r mor
e.6
8.2
8.4
3.4
7.4
571
.292
.281
.075
.175
.82.
58.
65.
35.
05.
6Fa
rmer
Age
39
year
s or y
oung
er.7
4.2
9.4
8.4
4.4
659
.980
.769
.169
.568
.52.
38.
44.
94.
95.
2 4
0-49
yea
rs.5
9.2
9.3
9.4
1.4
267
.184
.176
.173
.870
.73.
79.
05.
66.
05.
9 5
0 ye
ars o
r old
er.4
7.2
2.3
2.3
4.3
263
.180
.971
.669
.968
.03.
410
.56.
67.
06.
6
26
TA
BL
E 1
1. I
NT
ER
EST
EX
PEN
SE A
ND
FA
RM
INC
OM
E E
FFIC
IEN
CY
ME
ASU
RE
S (A
S A
PE
RC
EN
TA
GE
OF
GR
OSS
FA
RM
INC
OM
E),
QU
AR
TIL
E V
AL
UE
S FO
R 2
006,
ME
DIA
N V
AL
UE
S FO
R 2
005,
AN
D 5
-YE
AR
AV
ER
AG
E, 2
001-
2005
, OF
ME
DIA
N V
AL
UE
S, N
OR
TH
DA
KO
TA
FA
RM
BU
SIN
ESS
MA
NA
GE
ME
NT
ED
UC
AT
ION
PR
OG
RA
M P
AR
TIC
IPA
NT
S.
200
6
Ave
rage
of
20
06
Ave
rage
of
Farm
Gro
upU
pper
Qua
rtile
Low
er Q
uart
ileM
edia
n20
05M
edia
n20
01-2
005
Med
ians
Upp
erQ
uart
ileL
ower
Qua
rtile
Med
ian
2005
Med
ian
2001
-200
5M
edia
ns
Inte
rest
Exp
ense
(%)
Net
Far
m In
com
e (%
)A
ll Fa
rms
4.3
11.2
7.2
6.0
6.3
24.7
1.1
14.2
16.0
17.1
Reg
ion
Red
Riv
er V
alle
y3.
57.
55.
04.
94.
628
.413
.721
.811
.718
.5 N
orth
Cen
tral
4.9
11.4
7.6
6.5
6.7
24.7
5.2
15.0
12.5
17.7
Sou
th C
entra
l3.
310
.86.
75.
26.
023
.00.
412
.820
.116
.5 W
est
6.6
14.6
10.3
7.4
7.6
14.2
-13.
10.
620
.016
.6Fa
rm E
nter
pris
e C
rop
3.7
8.9
6.0
5.1
5.4
25.7
6.2
16.1
13.2
17.3
Liv
esto
ck7.
014
.510
.97.
78.
822
.6-9
.36.
028
.218
.9 M
ixed
5.2
14.1
10.1
7.3
7.9
20.3
-6.6
10.5
20.0
16.5
Farm
Sal
es $
99,9
99 o
r les
s5.
119
.011
.59.
310
.427
.3-1
2.1
18.2
20.6
17.3
$10
0,00
0-$2
49,9
995.
413
.49.
07.
97.
219
.4-7
.89.
417
.117
.2 $
250,
000-
$499
,999
3.8
9.3
6.1
5.6
5.8
25.0
7.1
16.2
15.0
17.4
$50
0,00
0 or
mor
e3.
87.
85.
54.
44.
324
.06.
914
.315
.517
.6Fa
rm S
ize
1,9
99 a
cres
or l
ess
3.8
11.5
7.1
6.4
6.6
26.3
1.1
15.8
14.9
16.7
2,0
00 a
cres
or m
ore
4.7
10.9
7.2
5.7
6.1
22.2
2.1
13.4
17.2
17.5
Cro
plan
d Te
nure
Ful
l ten
ant
2.8
8.7
4.9
4.0
4.8
26.6
0.4
13.0
16.8
17.2
1
-20
perc
ent o
wne
d4.
49.
06.
55.
15.
321
.83.
613
.914
.215
.6 2
1-40
per
cent
ow
ned
4.3
10.6
7.3
6.5
6.8
24.3
3.3
15.7
14.9
16.6
41
perc
ent o
r mor
e ow
ned
5.2
14.5
10.2
7.7
8.5
25.6
-0.5
14.2
21.0
19.3
Net
Far
m In
com
e $
19,9
99 o
r les
s7.
415
.111
.07.
88.
94.
7-1
5.0
-3.3
0.4
1.1
$20
,000
-$49
,999
5.0
10.4
7.5
6.3
6.8
22.8
10.7
15.6
15.4
16.8
$50
,000
-$99
,999
3.6
7.9
5.2
6.0
5.5
26.2
14.5
18.5
21.8
23.2
$10
0,00
0 or
mor
e2.
45.
94.
44.
03.
932
.021
.926
.926
.328
.9D
ebt-t
o-A
sset
Rat
io
0-4
0 pe
rcen
t2.
25.
63.
83.
13.
330
.514
.124
.121
.424
.5 4
1-70
per
cent
5.3
11.3
7.6
6.8
7.2
22.8
4.8
14.2
16.1
17.6
71
perc
ent o
r mor
e7.
314
.710
.38.
78.
814
.9-1
4.0
3.3
9.5
8.7
Farm
er A
ge 3
9 ye
ars o
r you
nger
4.2
10.8
7.0
6.1
6.2
27.0
3.4
18.2
18.3
18.9
40-
49 y
ears
4.8
11.5
7.6
6.0
6.1
19.1
-1.2
10.5
14.0
16.6
50
year
s or o
lder
3.7
10.9
6.9
5.9
6.8
24.3
3.8
15.6
16.8
16.5
27
APPENDIX
DEFINITION OF FINANCIAL MEASURES
Sixteen measures of financial performance werecalculated for each farm in this study. Therecommendations of the farm financial standardscouncil for calculating the ratios were followed asclosely as possible, from the Finpack data.
The farm financial standards council stated that amore meaningful comparison between farms isachieved with market valuation of assets, but dueto fluctuations in market values the cost method(acquisition cost less accumulated depreciation) issuperior for comparisons over time for anindividual farm operation. In fact, a dual columnbalance sheet is recommended: one column tovalue assets by the cost approach and a secondcolumn for market valuation of assets.
The valuation method used for current assets offarms in this study depended on what was mostrelevant and reliable. For example, current marketvalue was used for grain and market livestockinventories, but prepaid expenses and supplieswere listed at purchase cost.
Non-current asset valuation was:
• Machinery was valued at cost minusaccumulated depreciation. Annual depreciationwas 10 percent of un-depreciated value.
• Purchased breeding livestock was valued atcost. Raised replacement animals were valuedat a conservative market value when they enterthe breeding herd. This value remains constantuntil the animal leaves the herd.
• Generally, land was valued at cost. However,when a farmer enrolls in the farm businessprogram there may be a one-time revaluing ofland to a conservative market value.
Assets and liabilities not associated with the farmbusiness are excluded from the calculation of farmfinancial performance measures. Accruedliabilities were included on the balance sheets butdeferred tax liabilities were not.
The calculations of all financial measures, unlessotherwise noted, are accrual adjusted. Examplesare:
• Gross farm revenue is gross cash revenue plusthe changes in crop and market livestockinventories and accounts receivable.
• Interest expense is cash interest plus the changein accrued interest.
LIQUIDITY
Current Ratio
Computation: Current assets divided by currentliabilities.
Interpretation: This ratio measures the extentcurrent assets will cover liabilities that are dueduring the next 12 months. The higher the ratio themore cushion the business has to meet short-runobligations without disrupting normal businessoperations. The current ratio's limitation as ameasure of liquidity is that it does not match thetiming of financial obligations with the liquidationof current assets, nor does it consider any new debtincurred or assets that may be generated during the12 months after the balance sheet date.
Working Capital
Computation: Current assets minus currentliabilities.
Interpretation: This measure shows the dollaramount that current assets can or cannot covercurrent liabilities. The amount of working capitalnecessary to provide an adequate cushion formeeting debt obligations must be related to thesize of the business. Working capital as a measureof liquidity has similar limitations as the currentratio.
SOLVENCY
Debt-to-Asset
Computation: Total liabilities divided by totalassets.
28
Interpretation: This ratio shows the proportion ofassets owed to creditors. The lower thedebt-to-asset ratio the higher the solvency of thebusiness. Solvency is a measure of risk exposure.As solvency decreases, the owner has less equityrelative to debt, the ability to procure additionalfinancing may decrease, and the business's abilityto survive adverse outcomes is diminished.However, solvency should be viewed in connectionwith profitability. A low solvency position may bedesirable if debt capital provides returns in excessof its cost.
Equity-to-Asset
Computation: Owner equity divided by total assets.Interpretation: This ratio shows the portion of totalassets represented by owner equity. It is anotherway of expressing solvency.
Debt-to-Equity
Computation: Total liabilities divided by ownerequity.
Interpretation: This ratio shows the extent to whichdebt capital is combined with equity capital. It isanother way of expressing solvency.
PROFITABILITY
Rate of Return on Assets (ROA)
Computation: Net farm income plus interestexpense minus a charge for unpaid operator laborand management, divided by average total assets. Interpretation: This ratio measures the pre-tax rateof return on farm assets and is used to evaluatewhether assets are employed profitability in thebusiness. Two important factors affecting thismeasure are valuation of assets and the charge forunpaid operator labor and management. Fivepercent of gross revenue plus a $18,000 charge perfull time operator was used.
Rate of Return on Equity (ROE)
Computation: Net farm income minus a charge forunpaid operator labor and management, divided byaverage owner equity.
Interpretation: This ratio measures the pre-tax rateof return on equity capital employed in the
business. Two important factors affecting thismeasure are valuation of assets and the charge forunpaid operator labor and management. Fivepercent of gross revenue plus a $18,000 charge perfull time operator was used. This ratio should beevaluated carefully and used in conjunction withother ratios when analyzing a farm business. IfROE is greater than ROA, debt capital is beingemployed profitably—it is earning more than itcosts in interest. A high ratio may indicate anundercapitalized or highly leveraged business, anda low ratio may indicate a more conservative, highequity business. Operating Profit Margin
Computation: Net farm income plus interestexpense minus a charge for unpaid operator laborand management, divided by the value of farmproduction. Value of farm production is gross farmrevenue less purchase of market livestock andfeed.
Interpretation: This ratio measures net farmincome per dollar of farm production. It is apre-tax measure of profit margin from theemployment of assets. An important factor is thecharge for unpaid operator labor and management.There is a relationship between operating profitmargin, asset turnover rate, and ROA. Operatingprofit margin multiplied by asset turnover rateequals ROA.
Net Farm Income
Computation: Net farm income is total revenueearned minus the costs incurred to generate thoserevenues. It is cash revenue less cash expense anddepreciation plus capital adjustments (gain or lossfrom sale of capital assets). Accrual adjustmentsfor changes in inventories are included to properlymatch revenues and expenses to the time periodfor which net farm income is being measured.
Interpretation: Net farm income is the return to theoperator for unpaid labor and management andequity capital used in the farm business. Net farmincome is an absolute amount and it is difficult toassign a standard to all farms because ofdifferences in the amount of unpaid operator laborand equity used.
REPAYMENT CAPACITY
29
Term Debt Coverage Ratio
Calculation: Net farm income plus depreciation andother capital adjustments plus non-farm incomeplus scheduled interest on term debt minus familyliving expense and income taxes, divided byscheduled term debt principal and interestpayments.
Interpretation: This ratio measures the capacity ofthe borrower to cover all term debt payments. Themore the ratio exceeds 1, the greater the margin tocover term debt payments. The business may havesufficient earnings but the timing of cashflows maynot be adequate to make the payments on a timelybasis. Also, the ratio does not contain any provisionfor replacement of capital assets.
Capital Replacement and Term DebtRepayment Margin
Calculation: Net farm income plus depreciation andother capital adjustments plus non-farm incomeminus family living expense, income taxes, andscheduled term debt principal payments.
Interpretation: This is a measure of the business'sability to make payments on term debt. A positivemargin indicates the amount available, after makingterm debt payments, for acquiring capital assets orservicing additional debt. The capital replacementand term debt repayment margin is a dollar amount,so it is impossible to establish a standard for allfarm businesses.
FINANCIAL EFFICIENCY
Asset Turnover
Calculation: Value of farm production divided byaverage total assets. Value of farm production isgross farm revenue less purchase of marketlivestock and feed.
Interpretation: This is a measure of how efficientlyassets are used in the business. The higher thenumber, the more production is created per dollarof assets. Asset turnover can vary significantly bytype of farm and by asset base. For example, dairyand hog farms will typically have higher assetturnovers than cow-calf or cash grain operations.Asset turnover will probably be higher if capital
assets, such as machinery and land, are rentedinstead of owned.
Operating Expense Ratio
Calculation: Total expense less interest anddepreciation and capital adjustment divided bygross farm revenue.
Interpretation: This ratio measures how efficientlyoperating expenses are managed to generate grossfarm revenue. The operating expense ratio willtypically vary by farm type.
Depreciation Expense Ratio
Calculation: Depreciation and capital adjustmentsdivided by gross farm revenue.
Interpretation: This ratio expresses depreciationand capital adjustment relative to gross farmrevenue. It will vary by farm type and from year toyear. Caution must be used when evaluating thisratio. It does not comply with the farm financialstandards because the Finpack program, used togenerate the farm financial summaries, calculatesdepreciation and capital adjustment as one number(ending inventory plus capital sales less the sum ofbeginning inventory and capital purchases).Therefore depreciation cannot be isolated.
Interest Expense Ratio
Calculation: Interest expense divided by grossfarm revenue.
Interpretation: This ratio shows the portion ofgross farm revenue necessary to cover interestexpense. It is often used as a measure of financialrisk.
Net Farm Income Ratio
Calculation: Net farm income divided by grossfarm revenue.
Interpretation: This is a measure of how efficientthe farm business is at generating net income fromgross revenue. It is the portion of gross farmrevenue left after operating expense, depreciationand capital adjustment, and interest expense havebeen removed.
30
REFERENCES
Farm Financial Standards Task Force. 1991. Financial Guidelines for Agricultural Producers:Recommendations of the Farm Financial Standards Task Force. American BankersAssociation, Agricultural Bankers Division, Washington, DC.
North Dakota Agricultural Statistics Service. 2006. North Dakota Agricultural Statistics. NorthDakota State University, Fargo, and U.S. Department of Agriculture, Washington, DC.
Swenson, Andrew L. 2006. Financial Characteristics of North Dakota Farms, 2004-2005.Agribusiness and Applied Economics Report No. 588, Department of Agribusiness andApplied Economics, North Dakota State University, Fargo, Websitehttp://agecon.lib.umn.edu/
Swenson, Andrew L. 2004. Financial Characteristics of North Dakota Farms, 2001-2003.Agribusiness and Applied Economics Report No. 546, Department of Agribusiness andApplied Economics, North Dakota State University, Fargo, Websitehttp://agecon.lib.umn.edu/
Swenson, Andrew L. 2001. Financial Characteristics of North Dakota Farms, 1998-2000.Agribusiness and Applied Economics Report No. 467, Department of Agribusiness andApplied Economics, North Dakota State University, Fargo, Websitehttp://agecon.lib.umn.edu/.
Swenson, Andrew L. 1998. Financial Characteristics of North Dakota Farms, 1995-1997.Agricultural Economics Report No. 403. Department of Agricultural Economics, NorthDakota State University, Fargo. Website http://agecon.lib.umn.edu/