South Dakota farms in management program see income increase in 2018

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MITCHELL – In 2018, farms and ranches enrolled in the South Dakota Center for Farm/Ranch Management program experienced a rise in net farm income from 2017, according to data compiled for analysis. The median net farm income of farms in the program in 2018 was $53,888 compared to $26,209 in 2017. The data is compiled through a statewide educational program that assists producers with their recordkeeping and management offered through Mitchell Technical Institute.

The net farm income in 2018 is the highest since 2014 when the median net farm income was $115,564. The farms in the 2018 report are certainly not all the same that were represented in 2014, but the data indicates that the farms with a very low or negative net farm income in recent years may be trending upward. Farms and ranches are continuing on the right track to controlling costs and enhancing income from what resources are available. This information is based on averages and, as always, there are farms and ranches with higher and lower returns.

2018’s average farm gross cash income of $933,184 less $842,789 average cash expense, equals a net cash farm income of $90,395. That is a drop from $117,287 in 2017. 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 program farms in 2018 had inventory changes amounting to an increase of $55,396 contrary to the 2017 average of just $5,693 in inventory changes. This is what propelled the net farm income rise. Net farm income is the number used to measure a farm or ranch’s true profitability by including the above accrual adjustments. 

“When looking at the inventory changes, the crop and feed inventory value provided the ‘push’ upward. In the group summary, corn, soybeans, and alfalfa all yielded more than in 2017,” said instructor Will Walter, MTI. This measure was as of Jan. 1, 2018. Whatever price is received for that inventory since that time will affect the cash income for 2019. 

The average age of participating operators was 44.5 years old, with an average of 20.3 years farming experience. Cash family living expenses for a family size of 3.7 members on average was $64,351. In 2017 that average was $63,409. Farm families in the program showed an average of $36,065 in non-farm income, up from $30,845 in 2017. Since cash family living expenses and debt service must come from the net farm income amount, it can be assumed that off-farm income and/or a draw of equity is supporting many farm/ranch households.  

More information on the 2018 South Dakota Annual Report will be released soon and is available on the South Dakota Center for Farm/Ranch Management’s website at www.sdcfrm.com or by contacting the Center at 605-995-7191 or sdcfrm@mitchelltech.edu.