The average net farm income is $77,672 for the 58 farms included in the 2000 annual report of the Southeastern Minnesota Farm Business Management Association. This is an increase of 17% from 1999. The median or middle income was $39,675, considerably lower than the average. Even though gross cash farm income decreased more than the decrease in cash expenses, net farm income increased because depreciation decreased and inventory values increased. Income is still at a high level compared to the early 1990s and the 1980s. As in previous years, the income levels experienced by individual farms vary greatly from the overall average. When the net farm incomes for the 58 farms in the report were ranked from lowest to highest, the resulting graph shows how much the incomes do vary. Several farms experienced negative incomes, and several experienced very high incomes. Most of the net farm income ranged from just below 0 to about $140,000. The median or middle income was $39,675. The high 20% of these farms had an average net farm income of $250,243 in 2000; farms in the low 20%, -$15,401. This was an increase for the high group and a decrease for the low group. Average gross cash farm income in 2000 was $352,354 for these 58 farms. This was a 14% decrease from 1999. Together, milk, corn, and soybean sales were 65% of gross income in 2000. Compared to 1999, milk sales decreased by 15% and corn sales by 14. Soybean sales increased by 10%. Government payments (of all types) averaged $50,496 in 2000. They were $50,700 in 1999, $23,322 in 1998, and $12,907 in 1997. Government payments were 14% of gross income in 2000, compared to 12% in 1999, 7% in 1998, and 4% in 1997. Average total cash expenses were $267,986 in 2000. This was a decrease of 15% from the 1999 average. As a percentage of both cash expenses and depreciation, feed expenses were 14% in 2000, down from 1999. Seed, fertilizer, and crop chemicals were 16% of the total, up from 1999. Interest expense was 8% of the total, higher than in 1999. Real estate taxes remained at 2% in 2000 although the absolute dollar level was slightly lower. Both the rate of return on assets (ROA) and the rate of return to equity (ROE) increased on average. ROE was slightly higher than ROA indicating that debt capital was earning more than it was costing. Average total equity (of the 46 sole proprietors) was $553,823 at the end of 2000, an increase of $39,719 during the year. (Assets were valued on a cost basis.) Except for a decline during 1993, average equity has improved steadily since 1986. At the end of 2000, the average debt-asset ratio was up slightly to 35%. In 2000, crop yields were again lower than the record levels of 1998 for the Association. The average corn yield was 154 bushels per acre; soybeans were up slightly to 49 bushels per acre. Results by Type of Farm The 58 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. Using this 70 percent rule, there are 10 crop farms, 14 dairy farms, and 5 crop and hog farms. There were less than 5 crop and dairy farms so that data is not reported. There are 21 farms which do not have a single source (or pair of sources) of income over 70%. The average crop farm had the highest average net farm income ($111,775) in 2000. The average dairy farm had the second highest net farm income. In terms of the rate of return to assets (ROA), crop farms had the highest ROA (13%) in 2000. (Assets are valued on a cost basis.) Dairy farms had an average debt-asset ratio of 29% in 1999; crop farms averaged 30%. 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.