@article{Olson:14241,
      recid = {14241},
      author = {Olson, Kent D. and Westman, Lorin L. and Nordquist, Dale  W.},
      title = {1998 ANNUAL REPORT OF THE SOUTHEASTERN MINNESOTA FARM  BUSINESS MANAGEMENT ASSOCIATION},
      address = {1999},
      number = {1701-2016-139411},
      series = {Staff Paper P99-3},
      pages = {59},
      year = {1999},
      abstract = {The average net farm income is $65,739 for the 60 farms  included in the 1998 annual report of the Southeastern  Minnesota Farm Business Management Association.  This is a  decrease of 12% from 1997.  Even though gross cash farm  income increased, cash expenses also increased and  inventory values changed little (instead of increasing as  in 1997).  Thus, 1998 net farm income is lower.  However,  income is still at a high level compared to the early 1990s  and the 1980s.  (Net farm income is an accrual measure  calculated by subtracting cash farm expenses and  depreciation from total cash farm income and adjusting the  difference for changes in other capital and inventory  items.)

 Income  levels experienced by individual farms  vary greatly from the overall average.  The high 20% of  these farms had an average net farm income of $216,266 in  1998; farms in the low 20%, - $20,101.  This is an increase  for the high group, and a decrease for the low group.

  Average gross cash farm income in 1998 was $320,356 for  these 60 farms.  This is a 9% increase from 1997.  High  milk prices pushed milk sales to 42% of gross income in  1998.  Corn and soybean sales were almost a third of gross  income in 1998.  Compared to 1997, milk sales increased by  33%; corn sales, by 6%.  Hog sales decreased by 38%  compared to 1997.  Soybean sales decreased by 14%, and beef  finishing sales, by 30.2%.

 Government payments (of all  types) almost doubled from an average of $12,907 in 1997 to  $23,322 in 1998.  Government payments were 7.3% of gross  income in 1998, compared to 4.4% in 1997.  In 1998, the  total government payment came from several sources:   $11,284 from FAIR transition payments for the 1998 year;  $792 for FAIR transition payments for the 1999 year but  received in 1998; $5,529 for (emergency) market loss  payments; $5,107 for loan deficiency payments (LDPs); $425  for the conservation reserve program (CRP); and $185 for  other government payments.

 Average total cash expenses  were $239,611 in 1998.  This is an increase of 6.3% from  the 1997 average.  As a percentage of both cash expenses  and depreciation, feed expenses were 17% in 1998, down  slightly from 1997.  Seed, fertilizer, and crop chemicals  were 21% of the total, up from 1997.  Interest expense was  7.5% of the total, almost unchanged.  Real estate taxes  amounted to 2.2% in 1998; they were 2.1% in 1997.

 Both  the rate of return on assets (ROA) and the rate of return  to equity (ROE) decreased from 1997.  Average total equity  (of the 45 sole proprietors) was $474,219 at the end of  1998, an increase of $44,697 during the year.  (Assets were  valued on a cost basis.)   At the end of 1998, the average  debt- asset ratio was down slightly to 35%.

 Crop yields  were at record levels in 1998 for the Association.  The  average corn yield was 167 bushels per acre; soybeans were  at 50 bushels per acre.

Results by Type of Farm

 The 60  farms in the report are classified as a certain type (e.g.,  dairy) on the basis of having 70 percent or more of their  gross sales from that category.  As it has in the past 5  years, the average crop and dairy farm had the highest  average net farm income ($125, 540) in 1998.  The average  dairy farm had the second highest net farm income.  Dairy  farms have the highest ROA (11%) in 1998.   None of the  different types have an average debt-asset ratio greater  than 40%.

 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 and corn and soybean returns by  county.},
      url = {http://ageconsearch.umn.edu/record/14241},
      doi = {https://doi.org/10.22004/ag.econ.14241},
}