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Average net farm income was $36,614 in 2001 for the 207 farms included in this annual report of the Southwestern Minnesota Farm Business Management Association. This is a sharp drop (55%) from the average net farm income of $81,750 in 2000 (Figure 1). As in previous years, the actual profit levels experienced by individual farms vary greatly from the overall average profit. When the net farm incomes for the 207 farms in the report are ranked from lowest to highest, the resulting graph shows how much the incomes do vary (Figure 2). Twenty-four percent of the farms experienced negative net farm income in 2001; 8% had incomes over $100,000. Most of the net farm incomes ranged from below 0 to about $150,000. The median or middle income was $29,040. The high 20% of the farms had an average net farm income of $130,230 which is a 35% decrease from 2000. The low 20% of the farms had an average loss of $32,064 in 2000 which is much worse than 2000. Average gross cash farm income in 2001 was $433,698. This was a 3% increase from 2000. Four sources of sales again dominated: hogs, corn, soybeans, and beef finishing (Figure 3). These sources were quite stable between 2000 and 2001 except beef finishing which increased by 14%. Government payments of all types decreased slightly to $48,208 per average farm in 2001. Government payments for the average farm were $50,567 in 2000, $44,674 in 1999, $30,021 in 1998, and $12,257 in 1997. As a percentage of total income, government payments were 11% in 2001, compared to 12% in 2000, 11% in 1999, 8% in 1998, and 3% in 1997. Cash expenses increased 3% to an average of $358,506 in 2001. As a percentage of both cash expenses and depreciation in 2001, feeder purchases; feed, seed, fertilizer, and crop chemicals; and land rent continue to dominate (Figure 4). Both the average rate of return on assets (ROA) and the rate of return to equity (ROE) decreased substantially in 2001 compared to 2000 (Figure 5). In 2001 ROA averaged 6% and ROE was 4% using assets valued on a cost basis. Using a market value basis, average total equity (of the 178 sole proprietors) was $618,197 at the end of 2001. This was an increase of $20,730 during the year for these 178 farms (p. 17). Average equity has continued to improve since 1986. The average debt-asset ratio did not change, it remained at 47% at the end of 2001 (Figure 6). The average corn yield was 128 bushels per acre; soybeans were at 42 bushels per acre (Figure 7). Both yields were lower than the previous 3 years. Results by Type of Farm The 207 farms in the report were classified as a certain type of farm (e.g., hog) on the basis of having 70 percent or more of their gross sales from that category. Using this 70 percent rule in 2001, there were 107 crop farms, 11 hog farms, 22 crop and hog farms, 9 beef farms, and 12 crop and beef farms. (There were 40 farms which did not have a single source (or pair of sources) of income over 70%.) Compared to 2000, all types of farms (except beef farms) had lower net farm incomes in 2001 (Figure 8). A similar story can be seen in the rate of return to assets (ROA) (Figure 9). (Assets are valued on a cost-basis for ROA). Using assets valued on a market basis, the average crop farm has a debt-to-asset ratio of 41% at the end of 2001 (Figure 10). Farms with 70% of their income from beef only had an average debt-to-asset ratio higher than 50%. The report provides additional information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Also reported are whole-farm financial condition and performance by county, sales size class, and type of farm


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