C:Documents and SettingsdaleMy DocumentsAssn · PDF fileQui Parle, McLeod, Mower, Rock,...

The University of Minnesota is committed to the policy that all persons shall have equal access toits programs, facilities, and employment without regard to race, color, creed, religion, nationalorigin, sex, age, marital status, disability, public assistance status, veteran status, or sexualorientation.

Information on other titles in this series may be obtained from Waite Library, University ofMinnesota, Department of Applied Economics, 1994 Buford Avenue, 232 ClaOff, St. Paul, MN55108-6040, U.S.A. The Waite Library e-mail address is: [email protected]. This paper isavailable electronically from AgEcon Search at http://agecon.lib.umn.edu.

The entire report is available at: http://www.cffm.umn.edu/Publications/Pubs/FBMA/SW_MN_FBMA_2007.pdf

i

Executive Summary

2007 Annual Report of the Southwestern MinnesotaFarm Business Management Association

by Dale W. Nordquist, James N. Kurtz, Rob Holcomb, and Garen J. Paulson

Average net farm income was $242,267 in 2007 for the 107 farms included in this annual report of theSouthwestern Minnesota Farm Business Management Association. Average earnings increased by 57%over the average of $154,698 in 2006. In constant dollars, 2007 was the most profitable year forassociation members in the last 20 years (Figure 1). In fact, we have to go back to 1973 to find a moreprofitable year for association members. 2007 continued a steady climb in average earnings since 2001.Above average prices for corn, soybeans, and other crops more than compensated for reduced profitabilityof hog and beef enterprises.

As in previous years, the earnings of individual farms varied greatly from the overall average. Themedian or middle income was $199,745. Unlike most previous years, no farms experienced negative netfarm incomes in 2007; 7 % had incomes under $50,000 while 81% had incomes over $100,000. The high20% of the farms had an average net farm income of $518,851, an increase of 36% over 2006. The low20% of the farms had an average net farm income of $59,571 in 2007, an increase of 43% over 2006.

Average gross cash farm income was $731,897, a 20% increase from 2006 (Figure 2). Three sources ofsales dominated: hogs, corn, and soybeans (Figures 3 and 4). Total crop sales accounted for 44% whilelivestock sales and contracting income accounted for 45% of total cash receipts.

Government payments of all types averaged $17,033 in 2007, a 48% decrease from the previous year(Figure 2). With higher crop prices, no farms reported loan deficiency (LDP) payments in their farmincome in 2007, compared to $3,145 in 2006 and $26,519 in 2005. Government payments represented2% of gross cash farm income in 2007 compared to 5% in 2006.

Entire report is available at: http://www.cffm.umn.edu/Publications/Pubs/FBMA/SW_MN_FBMA_2007.pdf

ii

Cash expenses increased by 20% in 2007, the same percentage increase as cash income, to an average of$592,841. As a percentage of total expenses, seed, fertilizer, and crop chemicals (17%), feeder livestockpurchases (16%), feed (16%), and land rent (10%) continue to be the largest expense items (Figures 5 and6). Fuel and oil expense accounted for 4% of total expenses, unchanged from 2006.

Average rate of return on assets (ROA) was 17% in 2007 with assets valued at adjusted cost or bookvalue, up from 13% the previous year (Figure 7). Rate of return on equity (ROE) averaged 25%, up from19 percent. The fact that ROE exceeded ROA indicates that debt capital earned more than its cost.

Using the market value of assets, average total equity (of the 91 sole proprietors) was $1,224,181 at theend of 2007 (Figure 8), an increase of $252,175 from the beginning of the year for these farms. Theaverage debt-to-asset ratio improved slightly to 40%.

The average corn yield was 162 bushels per acre, down from 169 bushels in 2006. Soybeans averaged49 bushels per acre, down from 51 bushels in 2006 (Figure 9).

Results by Type of Farm

The 107 farms in the report were classified as a certain type of farm (e.g., hog) on the basis of having 70percent or more of their gross sales from that category. Using this criteria, there were 63 crop farms, 5hog farms, 7 crop and hog farms, and 8 crop and beef farms. (There were 18 farms which did not havea single source (or pair of sources) of income over 70%.)

Based on Net Farm Income, only Crop Farms and Crop and Beef Farms were more profitable than in2006. Specialized Hog Farms were again the most profitable (Figure 10) based on absolute income levelsbut it must be recognized that the Hog Farms were much larger in terms of gross sales than any other farmtype. In fact, the average Hog Farm’s gross sales were five times the association average.

iii

Crop and Beef Farms had the highest rate of return on assets (ROA) at 21%, followed closely by CropFarms at 20% (Figure 11). Hog Farms, while they had the highest absolute profit levels, had the lowestROA at 9%. (Assets are valued at adjusted cost basis for ROA calculations.)

Using assets valued at estimated market value and including deferred liabilities (estimated taxes ifliquidated) , the average farm had a debt-to-asset ratio of 40% at the end of 2007. Crop and Beef Farms,at 49%, carried more debt as a percentage of assets than any other farm type (Figure 12).

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, type of farm, debt-to-asset ratio, andage of operator.

iv

Figure 9. Average Corn & Soybean Yield

02550

75100125150

175200

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

Bus

hels

per

Acr

e

Corn Soybean

0200,000400,000600,000800,000

1,000,0001,200,0001,400,000

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

Dol

lars

per

Far

m

0102030405060708090100

Equity ($) D/A (%)

Figure 8. Ending Equity and Ending Debt-Asset Ratio

-10

0

10

20

30

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

Per

cent

ROA ROE

Figure 7. SW Rates of Return on Assets (ROA) and Equity (ROE)

v

Figure 11. ROA by Type

-10-505

10152025

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Per

cent

All Farms Crop Farms Hog FarmsCrop & Hog Farms Beef Farms Crop & Beef Farms

Figure 12. Debt-Asset Ratio by Type

020406080

100

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Per

cent


Figure 10. Net Farm Income by Type

-100,0000

100,000200,000300,000400,000500,000600,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

$ pe

r far

m


1Nordquist is Extension Economist–Center For Farm Financial Management, University ofMinnesota, Twin Cities; Kurtz and Holcomb are Regional Extension Educators--Farm Managementand Fieldmen for the Association; Paulson is an Association member and financial analyst for theAssociation; Rann Loppnow, Software Developer, Center For Farm Financial Management, was theprogrammer for RankEm Central (the analysis package used to prepare this report).

2007 Annual ReportSouthwestern Minnesota Farm Business Management Association

by

Dale W. Nordquist, James N. Kurtz, Rob Holcomb, and Garen J. Paulson1

This report summarizes the individual farm records of the members of the Southwestern MinnesotaFarm Business Management Association for 2007.

Whole-farm information and enterprise costs and returns are reported. The year-end analysis of theindividual farms was performed by the Association fieldmen using the FINPACK software from theCenter for Farm Financial Management. The individual analyses were summarized at theDepartment of Applied Economics using RankEm Central. In addition to the average of all farms,the averages for the high and low income groups are also presented. The tables are divided into fourmajor groups: whole-farm information, crop enterprises, livestock enterprises, and summaryinformation. The summary information includes whole farm historical trends and information bycounty, farm size, type of farm, debt to asset ratio, and operator age.

Of the 116 farms in the Southwestern Association, the data for 107 farms are included in this report.The rest were omitted because the records were incomplete at the time that this report was prepared.In addition to this report, members receive an annual farm business analysis; on-farm instructionalvisits; end-of-year income tax planning and preparation; periodic meetings, tours, and seminars; amonthly newsletter; and other managerial and educational assistance. Each farmer pays an annualfee which covers the majority of the cost, with the balance defrayed by the Minnesota ExtensionService and research programs of the University of Minnesota.

1

Southwestern Minnesota Farm Business Management Association

Distribution of Membership -- 2007Number of Number of

Farm RecordsCounty Units Submitted

Cottonwood 19 15Jackson 17 16Martin 2 2Murray 20 19Nobles 20 19Pipestone 12 11Redwood 8 8Watonwan 7 6Others2 11 11TOTAL 116 107

Officers and Directors

Tom Keller, PresidentMark Wiebe, Vice PresidentJanet Froslan, Secretary-Treasurer

The directors of the Southwestern Minnesota Farm Business Management Association for2007/2008 are: Chad Diemer, Ed Freking, Francis Gervais, Don Hagen, Charles Leuthold,Randy Peter, and Mike Sandager.

2In 2007 the Association had records submitted from members in Faribault, Lyon, LacQui Parle, McLeod, Mower, Rock, Wabasha, and Yellow Medicine counties, in addition to thecounties listed individually.

2

Southwestern Minnesota Farm Business Management Association

Table of ContentsPage

Whole-Farm Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-7 Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Financial Standards Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Farm Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-11 Inventory Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Depreciation and Other Capital Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Profitability Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Liquidity Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Balance Sheet at Cost Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Balance Sheet at Market Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Crop Production and Marketing Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Household and Personal Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Operator and Labor Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Nonfarm Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Crop Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Corn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24-27 Soybeans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-31 Oats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-33 Corn Silage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34-35 Hay, Alfalfa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36-37 Hay, Grass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38-39 Pasture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40-41 CRP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Livestock Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Hogs, Farrow-to-Finish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44-45 Hogs, Weaning to Finish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46-47 Hogs, Contractee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Beef Cow-Calf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Beef, Finish Beef Calves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50-51 Dairy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Dairy Replacement Heifers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Summary Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Financial Summary of the Whole-Farm Analysis by Years . . . . . . . . . . . . . . . . . . . 56-57 Financial Summary -- by County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Financial Summary -- by Gross Farm Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Financial Summary -- Farm Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Financial Summary -- by Debt to Asset Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Financial Summary -- by Age of Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Corn Production Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Crop Enterprise Analysis -- by Tillage System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Crop Enterprise Analysis -- by Row Width . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Crop Enterprise Analysis -- by RoundUp Ready . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Crop Enterprise Analysis -- by Bt Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Crop Enterprise Analysis -- by Enterprise Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Soybean Production Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Crop Enterprise Analysis -- by Tillage System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Crop Enterprise Analysis -- by Row Width . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Crop Enterprise Analysis -- by RoundUp Ready . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Crop Enterprise Analysis -- by Enterprise Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Appendix I -- Whole Farm Analysis Procedures and Measures . . . . . . . . . . . . . . . . . . 75 Appendix II -- Crop Enterprise Analysis Procedures and Measures . . . . . . . . . . . . . . . 83 Appendix III -- Livestock Enterprise Analysis Procedures and Measures . . . . . . . . . . . 85 Appendix IV -- Prices Used in the Analysis Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

3

Whole-Farm ReportsThe whole-farm reports summarize the financial performance of member farms in 2007. Each table(except for the balance sheets) includes the average of the 107 farms included in the report and theaverage 20 percent of the farms with the lowest and highest profits (base on Net Farm Income). TheBalance Sheets include only sole proprietors; partnerships and corporations are excluded becausesome debt is held outside of the business, causing potential misinterpretations of the averagefinancial condition. Appendix I provides detail on how the whole-farm measures are calculated.Below is a short summary of the whole farm reports.

Financial Summary

The Financial Summary report provides a summary of the key financial measures and ratios includedon the other detailed whole farm reports.

Financial Standards Measures

The Farm Financial Standards Council recommends that farms use these sixteen measures asstandard measures of farm financial performance. They are sometimes called the Sweet 16. Manyare repeated on the Profitability, Liquidity, and Balance Sheet tables. For a complete description,see the Financial Guidelines for Agricultural Producers at www.ffsc.org/html/guidelin.htm.

Farm Income Statement

The Income Statement calculates the accrual Net Farm Income generated by the average farm foryear 2007. Net Farm Income represents the return to the operator's and family's unpaid labor,management, and equity capital (net worth). It is the amount the farm contributed to owner familyliving, income taxes, and net worth growth. However, it does not include any asset appreciation,debt forgiveness or asset repossessions. The Inventory Changes and Depreciation and OtherCapital Adjustments tables provide further detail on the non-cash adjustments made to calculate theaccrual Net Farm Income.

Profitability Measures

The profitability measures are calculated based on both the cost value of assets and the market value.When calculated based on the market value of assets, the profitability measures can be comparedto interest rates and returns available on alternative investments. When based on cost values, thereturns more closely estimate the actual returns from the actual investment. (Cost values do notreflect the tax basis of farm assets. Instead, a method of calculating depreciation is used thatestimates economic depreciation over the useful life of the assets.)

The Rate of Return on Assets (ROA) can be thought of as the interest rate earned by all investmentin farm assets. Rate of Return on Equity (ROE) is the rate earned on the operator’s equity or networth in the farm business. If ROE is higher than ROA, borrowed funds more than paid for theircost in interest expense. Operating Profit Margin measures efficiency in farm operations. Thehigher the margin, the more of the farm income remained in pockets of the farm operator. AssetTurnover Rate measures efficiency in use of capital. Again, the higher the better. Farms with highinvestment in fixed assets will generally have a lower turnover rate than those who lease a majorshare of their capital.

5

Liquidity Measures

Liquidity reflects the ability of the farm family to meet cash obligations including family livingwithdrawals, income taxes, and debt repayment. Liquidity measures are calculated on both a cashand accrual basis. The cash measures reflect how cash actually flowed through the operationsduring the year. The accrual measures, which adjust for changes in crop, livestock, and otherinventories, more accurately reflect the income generation capacity of the businesses. Years to Turnover Intermediate Debt reflects the ability of the business to repay short andintermediate term liabilities. Because intermediate term debt is usually scheduled for repaymentover a three to seven year term, this measure is a simple way to reflect debt repayment capacity.Expense as a Percent of Income reflects the portion of gross income that was used to pay operatingexpenses. It includes interest expense but not depreciation. Interest as a Percent of Income showshow much of gross income went solely to pay interest expenses.

Balance Sheets

Balance sheet reports are included for both the cost and market value of assets. In both tables,current assets are identical, with crop and livestock inventories generally valued at market value.This conforms to the methodology recommended by the Farm Financial Standard Council.Intermediate and long term assets are shown at depreciated value using estimated economicdepreciation, not tax, on the cost-based table. On the market table, they are valued at estimatedmarket value.

Liabilities are the same on the cost and market tables except for the inclusion of Deferred Liabilitieson the market statements. Deferred liabilities are the estimated taxes that would be paid if assetswere liquidated at their market values.

Net Worth Change on the cost value table is the amount of earned net worth growth or loss for theyear. Net worth change on the market value table includes both earned growth and changes in themarket valuation of capital assets.

Statement of Cash Flows

The Statement of Cash Flows displays the sources and uses of cash for the year. Cash FromOperating Activities includes sources and uses of cash related to normal farm operations. In the caseof sole proprietors and partnerships, it also usually includes nonfarm income and expenses activities.Cash From Investing Activities reflect cash used to buy and sell capital assets. Cash FromFinancing Activities includes sources and uses of borrowed funds.

Crop Production and Marketing

This table reports farm size in acres farmed, average crop yields for major commodities, and averagecrop sales prices for the calendar year. Yields and prices are reported for the average of all farmsfor more commodities than those included in the High and Low columns because a minimum of fivefarms are required to report the yield or price for any group.

6

Household and Personal Expenses

This table reports family living and other non-farm expenditures. Only sole proprietors who keepdetailed family living records are included.

Operator and Labor Information

All previous tables report results per farm, regardless of the number of families or operatorsinvolved in the operation. This report repeats several measures from previous tables on a PerOperator basis. It also summarizes estimated labor hours used and labor performance.

Nonfarm Summary

This table summarizes nonfarm earnings for the average farm and details nonfarm assets andliabilities.

7

Financial SummarySouthwest Minnesota Farm Business Management Association

(Farms Sorted By Net Farm Income)

Avg. OfAll Farms Low 20% High 20%

Number of farms 107 21 22

Income StatementGross cash farm income 731,897 266,212 1,636,799Total cash farm expense 592,841 211,679 1,394,490Net cash farm income 139,055 54,533 242,309Inventory change 135,843 23,140 331,803Depreciation and capital adjust -32,631 -18,545 -55,261Average net farm income 242,267 59,128 518,851Median net farm income 199,745 59,571 408,525

Profitability (cost)Labor and management earnings 195,584 44,658 428,319Rate of return on assets 17.4 % 9.4 % 20.9 %Rate of return on equity 25.0 % 13.6 % 29.3 %Operating profit margin 34.8 % 21.4 % 36.5 %Asset turnover rate 50.0 % 43.8 % 57.1 %

LiquidityEnding current ratio 2.44 1.34 3.31Ending working capital 265,457 47,600 478,188End working capital to gross inc 36.3 % 17.9 % 29.2 %Term debt coverage ratio 410.3 % 215.6 % 561.1 %Expense as a percent of income 67.8 % 72.8 % 70.5 %Interest as a percent of income 3.7 % 6.3 % 2.6 %

Solvency (market)Number of sole proprietors 91 19 15Ending farm assets 1,799,123 929,761 3,033,313Ending farm liabilities 764,600 457,764 1,283,768Ending total assets 2,034,365 1,086,209 3,222,784Ending total liabilities 810,184 486,896 1,322,703Ending net worth 1,224,181 599,312 1,900,081Net worth change 252,175 110,337 441,996Ending farm debt to asset ratio 42 % 49 % 42 %Beg total debt to asset ratio 41 % 48 % 43 %End total debt to asset ratio 40 % 45 % 41 %

Nonfarm InformationNet nonfarm income 25,164 39,654 7,310Farms reporting living expenses 66 14 12Total family living expense 56,229 45,407 60,935Total living, invest, & capital 94,373 57,850 103,281

Crop AcresTotal acres owned 241 140 355Total crop acres 825 374 1,410Total crop acres owned 208 125 306Total crop acres cash rented 546 206 996Total crop acres share rented 71 42 108

2007 Annual Report RankEm, Copyright (c) 2001-2006, University of Minnesota

8

Financial Standards MeasuresSouthwest Minnesota Farm Business Management Association




LiquidityCurrent ratio 2.50 1.45 3.45Working capital 393,911 64,763 1,010,298

Solvency (market)Farm debt to asset ratio 42 % 47 % 40 %Farm equity to asset ratio 58 % 53 % 60 %Farm debt to equity ratio 72 % 88 % 67 %

Profitability (cost)Rate of return on farm assets 17.4 % 9.4 % 20.9 %Rate of return on farm equity 25.0 % 13.6 % 29.3 %Operating profit margin 34.8 % 21.4 % 36.5 %Net farm income 242,267 59,128 518,851

Repayment CapacityTerm debt coverage ratio 410 % 216 % 561 %Capital replacement margin 188,536 39,715 433,408

EfficiencyAsset turnover rate (cost) 50.0 % 43.8 % 57.1 %Operating expense ratio 64.1 % 66.5 % 67.9 %Depreciation expense ratio 3.8 % 6.5 % 2.8 %Interest expense ratio 3.7 % 6.3 % 2.6 %Net farm income ratio 28.4 % 20.7 % 26.7 %

2007 Annual Report RankEm, Copyright (c) 2001-2006, University of Minnesota2007 Annual Report RankEm, Copyright (c) 2001-2006, University of Minnesota

9

Farm Income StatementSouthwest Minnesota Farm Business Management Association




Cash Farm IncomeBarley 280 223 -Beans, Navy 332 - -Corn 171,371 71,830 257,182Corn Silage 178 190 -Hay, Alfalfa 14,404 8,147 51,042Hay, Grass 119 4 186Oats 645 1,047 485Peas 385 540 -Soybeans 128,222 56,792 207,379Sugar Beets 899 - -Sweet Corn 835 344 -Wheat, Spring 774 970 1,135Miscellaneous crop income 1,060 811 3,650Beef Bulls 74 - 360Beef Cow-Calf, Beef Calves 1,701 4,779 388Beef, Finish Beef Calves 51,354 15,882 38,641Beef, Finish Yrlg Steers 5,367 - 26,105Dairy, Milk 53,397 7,464 235,756Dairy, Dairy Calves 955 - 4,612Dairy Heifers (for sale) 2,408 732 -Dairy Steer Finishing 1,728 725 -Hogs, Farrow-Fin, Raised Hogs 14,388 16,046 5,238Hogs, Feeder Pigs, Feeder Pigs 35 179 -Hogs, Finish Feeder Pigs 57,486 36,415 187,003Sheep, Market Lambs, Mkt Lambs 1,899 - 5,021Hogs, Weaning to Feeder 22,616 - -Hogs, Weaning to Finish 109,640 - 440,532Dairy Steer Feeders 148 - 45Dairy Steer Backgrounding 135 688 -CCC market loan gain 0 - -Cull breeding livestock 5,665 3,404 16,081Misc. livestock income 2,853 81 4,327Direct & CC govt payments 15,083 8,280 26,040CRP payments 789 271 1,392Livestock govt payments 151 114 384Other government payments 1,010 998 591Custom work income 17,951 18,820 14,460Patronage dividends, cash 9,744 950 13,349Insurance income 1,483 1,504 2,636Cash from hedging accts 7,754 448 30,756Contract livestock income 3,725 - -Other farm income 22,852 7,534 62,022

Gross Cash Farm Income 731,897 266,212 1,636,799


10

Farm Income Statement (Continued)Southwest Minnesota Farm Business Management Association




Cash Farm ExpenseSeed 42,812 17,969 67,163Fertilizer 44,983 22,839 62,992Crop chemicals 17,994 6,227 35,752Crop insurance 10,764 5,862 17,093Drying fuel 1,550 537 2,131Irrigation energy 124 - -CCC buyback 10,557 4,198 20,519Crop hauling and trucking 394 246 186Crop marketing 876 142 638Crop miscellaneous 10,050 1,081 38,095Feeder livestock purchase 101,422 21,401 261,550Purchased feed 102,089 23,829 333,358Breeding fees 886 365 2,119Veterinary 7,460 3,026 24,932Supplies 5,790 1,715 13,462Contract production exp. 4,273 - 16,998Livestock hauling and trucking 1,448 172 3,348Livestock marketing 1,414 84 6,711Interest 30,714 19,008 48,554Fuel & oil 23,875 15,455 46,515Repairs 26,585 13,246 45,516Custom hire 10,580 3,098 27,306Hired labor 22,783 6,671 71,825Land rent 62,030 23,426 113,330Machinery leases 13,030 3,684 46,952Building leases 9,768 893 35,396Real estate taxes 4,328 2,199 7,406Farm insurance 6,864 3,565 12,805Utilities 6,674 3,796 10,306Dues & professional fees 1,654 712 2,149Hedging account deposits 3,872 1,990 11,493Miscellaneous 5,197 4,242 7,892

Total cash expense 592,841 211,679 1,394,490Net cash farm income 139,055 54,533 242,309

Inventory ChangesCrops and feed 118,945 18,304 276,599Market livestock -3,175 -7,213 24,627Accounts receivable 6,700 8,775 8,475Prepaid expenses and supplies 15,984 2,412 24,230Accounts payable -2,611 862 -2,128

Total inventory change 135,843 23,140 331,803Net operating profit 274,898 77,672 574,112

Depreciation and Other Capital AdjustmentsBreeding livestock -2,087 -2,309 -3,553Machinery and equipment -22,536 -13,008 -34,590Buildings and improvements -7,977 -3,417 -14,195Other farm capital -30 189 -2,923

Total depr. and other capital adj -32,631 -18,545 -55,261

Net farm income 242,267 59,128 518,851


11

Inventory ChangesSouthwest Minnesota Farm Business Management Association




Net cash farm income 139,055 54,533 242,309

Crops and FeedEnding inventory 403,174 126,556 761,515Beginning inventory 284,229 108,252 484,916Inventory change 118,945 18,304 276,599

Market LivestockEnding inventory 111,672 25,820 311,285Beginning inventory 114,847 33,033 286,657Inventory change -3,175 -7,213 24,627

Accts Receivable & Other Current AssetsEnding inventory 25,076 17,084 56,822Beginning inventory 18,376 8,309 48,348Inventory change 6,700 8,775 8,475

Prepaid Expenses and SuppliesEnding inventory 60,845 18,525 88,954Beginning inventory 44,861 16,113 64,724Inventory change 15,984 2,412 24,230

Accounts Payable & Accrued ExpensesBeginning inventory 18,777 9,934 35,172Ending inventory 21,388 9,072 37,301Inventory change -2,611 862 -2,128

Total inventory change 135,843 23,140 331,803

Net operating profit 274,898 77,672 574,112


12

Depreciation and Other Capital AdjustmentsSouthwest Minnesota Farm Business Management Association




Net operating profit 274,898 77,672 574,112

Breeding LivestockEnding inventory 7,402 7,927 14,525Capital sales 339 780 -Beginning inventory 7,754 8,355 17,170Capital purchases 2,074 2,661 908Depreciation, capital adjust. -2,087 -2,309 -3,553

Machinery and EquipmentEnding inventory 216,397 125,932 324,047Capital sales 2,331 1,680 2,006Beginning inventory 187,678 113,987 288,274Capital purchases 53,586 26,633 72,370Depreciation, capital adjust. -22,536 -13,008 -34,590

Buildings and ImprovementsEnding inventory 184,694 58,716 301,391Capital sales 662 - -Beginning inventory 155,461 53,714 229,504Capital purchases 37,872 8,418 86,083Depreciation, capital adjust. -7,977 -3,417 -14,195

Other Capital AssetsEnding inventory 59,013 8,886 114,841Capital sales 504 258 966Beginning inventory 56,499 8,771 114,801Capital purchases 3,048 184 3,929Depreciation, capital adjust. -30 189 -2,923

Total depreciation, capital adj. -32,631 -18,545 -55,261

Net farm income 242,267 59,128 518,851


13

Profitability MeasuresSouthwest Minnesota Farm Business Management Association




Profitability (assets valued at cost)Net farm income 242,267 59,128 518,851Labor and management earnings 195,584 44,658 428,319Rate of return on assets 17.4 % 9.4 % 20.9 %Rate of return on equity 25.0 % 13.6 % 29.3 %Operating profit margin 34.8 % 21.4 % 36.5 %Asset turnover rate 50.0 % 43.8 % 57.1 %

Interest on farm net worth 46,683 14,470 90,532Farm interest expense 31,636 18,140 49,926Value of operator lbr and mgmt. 48,298 26,231 76,315Return on farm assets 225,606 51,037 492,462Average farm assets 1,297,902 544,328 2,360,351Return on farm equity 193,969 32,897 442,536Average farm equity 775,908 241,165 1,508,870Value of farm production 648,768 238,538 1,348,041



Profitability (assets valued at market)Net farm income 297,686 108,544 533,418Labor and management earnings 235,106 82,184 421,747Rate of return on assets 15.5 % 11.8 % 16.3 %Rate of return on equity 23.9 % 18.7 % 24.6 %Operating profit margin 43.3 % 42.1 % 37.6 %Asset turnover rate 35.9 % 28.1 % 43.4 %

Interest on farm net worth 62,580 26,360 111,671Farm interest expense 31,636 18,140 49,926Value of operator lbr and mgmt. 48,298 26,231 76,315Return on farm assets 281,024 100,453 507,029Average farm assets 1,807,516 850,261 3,105,323Return on farm equity 249,387 82,313 457,102Average farm equity 1,042,997 439,333 1,861,184Value of farm production 648,768 238,538 1,348,041


14

Liquidity MeasuresSouthwest Minnesota Farm Business Management Association




Liquidity (cash)Net cash farm income 139,055 54,533 242,309Net nonfarm income 25,164 39,654 7,310Family living and taxes 70,665 55,321 86,642Principal due on long term debt 16,271 8,266 20,299Cash available for interm. debt 77,284 30,599 142,678Average intermediate debt 118,555 63,845 236,235

Years to turnover interm. debt 1.5 2.1 1.7Expense as a % of income 81 % 80 % 85 %Interest as a % of income 4 % 7 % 3 %Working capital to gross income 54 % 24 % 62 %

Liquidity (accrual)Total accrual farm income 854,366 286,078 1,946,501Total accrual operating expense 579,468 208,405 1,372,389Net accrual operating income 274,898 77,672 574,112Net nonfarm income 25,164 39,654 7,310Family living and taxes 70,665 55,321 86,642Principal due on long term debt 16,271 8,266 20,299Available for intermediate debt 213,126 53,739 474,482Average intermediate debt 118,555 63,845 236,235

Years to turnover interm. debt 0.6 1.2 0.5Expense as a % of income 68 % 73 % 71 %Interest as a % of income 4 % 6 % 3 %Working capital to gross income 46 % 23 % 52 %


15

Balance Sheet at Cost ValuesSouthwest Minnesota Farm Business Management Association


Avg. Of

All Farms Low 20% High 20%


Beginning Ending Beginning Ending Beginning EndingAssets

Current Farm AssetsCash and checking balance 16,616 14,987 15,378 17,515 26,442 15,588Prepaid expenses & supplies 41,566 57,130 16,464 19,349 68,937 93,758Growing crops 0 94 0 120 0 420Accounts receivable 11,960 20,501 9,095 18,683 22,531 44,436Hedging accounts 1,235 1,961 16 79 623 3,778Crops held for sale or feed 234,796 326,478 100,186 114,489 420,817 650,025Crops under government loan 32,030 41,937 10,274 12,046 37,565 45,230Market livestock held for sale 66,647 65,448 35,517 27,156 115,260 151,240Other current assets 15 11 0 0 0 0

Total current farm assets 404,866 528,547 186,929 209,437 692,174 1,004,475

Intermediate Farm AssetsBreeding livestock 7,143 6,310 8,497 8,189 24,177 20,368Machinery and equipment 164,475 191,417 108,640 119,418 258,094 304,638Titled vehicles 6,491 8,750 7,853 10,091 5,457 7,458Other intermediate assets 5,465 5,617 731 717 6,808 7,312

Total intermediate farm assets 183,573 212,094 125,721 138,416 294,536 339,776

Long Term Farm AssetsFarm land 263,534 313,821 150,952 164,636 468,000 547,880Buildings and improvements 132,781 155,773 53,704 59,515 200,624 256,979Other long-term assets 40,263 42,676 8,508 8,570 62,838 65,839

Total long-term farm assets 436,578 512,270 213,164 232,722 731,461 870,697Total Farm Assets 1,025,017 1,252,912 525,814 580,574 1,718,172 2,214,949

Total Nonfarm Assets 164,526 184,208 121,412 128,738 137,723 151,240Total Assets 1,189,543 1,437,120 647,226 709,313 1,855,895 2,366,189

Liabilities

Current Farm LiabilitiesAccrued interest 6,786 6,630 8,732 7,998 12,311 8,216Accounts payable 8,467 10,934 1,825 1,795 12,403 19,203Current notes 127,919 141,510 110,391 111,280 187,826 191,618Government crop loans 21,267 18,989 7,356 5,284 22,894 19,823Principal due on term debt 34,662 38,354 22,379 30,470 60,615 64,273

Total current farm liabilities 199,102 216,416 150,684 156,826 296,049 303,134

Total intermediate farm liabs 63,900 74,882 47,945 53,630 117,855 167,537Total long term farm liabilities 170,768 198,357 126,406 126,881 283,313 305,505Total farm liabilities 433,769 489,655 325,035 337,337 697,217 776,176

Total nonfarm liabilities 29,308 32,992 24,283 22,216 21,602 28,994Total liabilities 463,078 522,646 349,318 359,553 718,819 805,170

Net worth (farm and nonfarm) 726,465 914,473 297,908 349,760 1,137,076 1,561,018Net worth change 188,008 51,852 423,942

Ratio Analysis

Current farm liabilities / assets 49 % 41 % 81 % 75 % 43 % 30 %Curr. & interm farm liab. / assets 45 % 39 % 64 % 61 % 42 % 35 %Long term farm liab. / assets 39 % 39 % 59 % 55 % 39 % 35 %Total debt to asset ratio 39 % 36 % 54 % 51 % 39 % 34 %


16

Balance Sheet at Market ValuesSouthwest Minnesota Farm Business Management Association




Beginning Ending Beginning Ending Beginning EndingAssetsCurrent Farm Assets

Cash and checking balance 16,616 14,987 15,378 17,515 26,442 15,588Prepaid expenses & supplies 41,566 57,130 16,464 19,349 68,937 93,758Growing crops 0 94 0 120 0 420Accounts receivable 11,960 20,501 9,095 18,683 22,531 44,436Hedging accounts 1,235 1,961 16 79 623 3,778Crops held for sale or feed 234,796 326,478 100,186 114,489 420,817 650,025Crops under government loan 32,030 41,937 10,274 12,046 37,565 45,230Market livestock held for sale 66,647 65,448 35,517 27,156 115,260 151,240Other current assets 15 11 0 0 0 0

Total current farm assets 404,866 528,547 186,929 209,437 692,174 1,004,475

Intermediate Farm AssetsBreeding livestock 20,076 18,116 19,102 18,158 60,761 55,453Machinery and equipment 283,733 316,306 188,548 198,200 464,703 523,483Titled vehicles 7,393 10,219 9,051 11,945 7,603 9,342Other intermediate assets 8,591 8,775 693 717 12,075 12,579

Total intermediate farm assets 319,792 353,416 217,394 229,020 545,142 600,857

Long Term Farm AssetsFarm land 468,571 627,631 300,727 383,473 786,662 1,011,616Buildings and improvements 196,139 226,601 85,055 99,261 281,625 342,829Other long-term assets 52,072 62,928 8,508 8,570 70,368 73,536

Total long-term farm assets 716,782 917,160 394,289 491,304 1,138,655 1,427,981Total Farm Assets 1,441,440 1,799,123 798,613 929,761 2,375,971 3,033,313

Total Nonfarm Assets 208,157 235,242 143,759 156,448 171,050 189,471Total Assets 1,649,598 2,034,365 942,371 1,086,209 2,547,021 3,222,784

LiabilitiesCurrent Farm Liabilities

Accrued interest 6,786 6,630 8,732 7,998 12,311 8,216Accounts payable 8,467 10,934 1,825 1,795 12,403 19,203Current notes 127,919 141,510 110,391 111,280 187,826 191,618Government crop loans 21,267 18,989 7,356 5,284 22,894 19,823Principal due on term debt 34,662 38,354 22,379 30,470 60,615 64,273

Total current farm liabilities 199,102 216,416 150,684 156,826 296,049 303,134

Total intermediate farm liabs 63,900 74,882 47,945 53,630 117,855 167,537Total long term farm liabilities 170,768 198,357 126,406 126,881 283,313 305,505Total farm liabilities 433,769 489,655 325,035 337,337 697,217 776,176

Total nonfarm liabilities 29,308 32,992 24,283 22,216 21,602 28,994Total liabs excluding deferreds 463,078 522,646 349,318 359,553 718,819 805,170Total deferred liabilities 214,513 287,538 104,078 127,343 370,117 517,533Total liabilities 677,591 810,184 453,396 486,896 1,088,936 1,322,703

Retained earnings 726,465 914,473 297,908 349,760 1,137,076 1,561,018Market valuation equity 245,541 309,708 191,067 249,552 321,009 339,062Net worth (farm and nonfarm) 972,006 1,224,181 488,975 599,312 1,458,085 1,900,081Net worth excluding deferreds 1,186,520 1,511,719 593,053 726,656 1,828,202 2,417,614Net worth change 252,175 110,337 441,996

Ratio AnalysisCurrent farm liabilities / assets 49 % 41 % 81 % 75 % 43 % 30 %Curr. & interm farm liab. / assets 36 % 33 % 49 % 48 % 33 % 29 %Long term farm liab. / assets 24 % 22 % 32 % 26 % 25 % 21 %Total debt to asset ratio 41 % 40 % 48 % 45 % 43 % 41 %Debt to assets excl deferreds 28 % 26 % 37 % 33 % 28 % 25 %


17

Statement Of Cash FlowsSouthwest Minnesota Farm Business Management Association




Beginning cash (farm & nonfarm) 44,703 31,738 139,365

Cash From Operating ActivitiesGross cash farm income 731,897 266,212 1,636,799Net nonfarm income 25,164 39,654 7,310Total cash farm expense -592,841 -211,679 -1,394,490Apparent family living expense -56,839 -48,948 -65,015Income and social security tax -11,776 -6,373 -11,654

Cash from operations 95,605 38,865 172,950

Cash From Investing ActivitiesSale of breeding livestock 339 780 -Sale of machinery & equipment 2,127 639 2,006Sale of titled vehicles 204 1,041 -Sale of farm land 130 571 -Sale of farm buildings 662 - -Sale of other farm assets 504 258 966Sale of nonfarm assets 4,616 7,822 2,233Purchase of breeding livestock -2,074 -2,661 -908Purchase of machinery & equip. -50,039 -22,660 -69,650Purchase of titled vehicles -3,547 -3,973 -2,720Purchase of farm land -51,620 -12,381 -99,074Purchase of farm buildings -37,872 -8,418 -86,083Purchase of other farm assets -3,048 -184 -3,929Purchase of nonfarm assets -22,036 -7,268 -15,977

Cash from investing activities -161,653 -46,433 -273,136

Cash From Financing ActivitiesMoney borrowed 392,986 210,669 585,124Cash gifts and inheritances 9,121 2,556 9,830Principal payments -321,152 -199,640 -429,570Dividends paid -2,050 - -9,972Gifts given -143 -654 -74

Cash from financing activities 78,762 12,932 155,338

Net change in cash balance 12,714 5,364 55,152

Ending cash (farm & nonfarm) 57,417 37,101 194,517


18

Crop Production and Marketing SummarySouthwest Minnesota Farm Business Management Association




Acreage SummaryTotal acres owned 241 140 355Total crop acres 825 374 1,410Crop acres owned 208 125 306Crop acres cash rented 546 206 996Crop acres share rented 71 42 108Total pasture acres 11 19 19

Average Price Received (Cash Sales Only)Soybeans per bushel 7.14 6.76 7.39Corn per bushel 3.00 2.82 3.13Hay, Alfalfa per ton 96.08 107.66 -Wheat, Spring per bushel 5.88 - -Oats per bushel 2.86 - -Hay, Grass per ton 45.79 - -

Average Yield Per AcreCorn (bushel) 162.07 148.47 162.14Soybeans (bushel) 48.89 44.86 49.80Hay, Alfalfa (ton) 3.60 2.65 3.48Corn Silage (ton) 20.32 - 20.64Hay, Grass (ton) 2.23 - -Oats (bushel) 93.40 - -Wheat, Spring (bushel) 46.30 - -


19

Household and Personal ExpensesSouthwest Minnesota Farm Business Management Association




Average family size 3.1 3.1 3.4

Family Living ExpensesFood and meals expense 7,819 7,439 9,337Medical care 3,888 4,259 4,770Health insurance 4,612 5,732 5,799Cash donations 4,586 4,723 4,734Household supplies 4,711 4,370 2,971Clothing 2,861 1,623 5,929Personal care 2,271 714 2,339Child / Dependent care 445 654 24Alimony and Child support - - -Gifts 3,230 2,368 2,827Education 3,880 640 5,931Recreation 3,590 3,616 4,570Utilities (household share) 2,330 1,891 1,665Nonfarm vehicle operating expense 4,906 3,390 4,967Household real estate taxes 239 120 215Dwelling rent 50 - -Household repairs 2,409 617 3,050Nonfarm interest 973 1,724 774Disability / Long term care insuran 434 165 899Life insurance payments 2,221 2,203 1,571Nonfarm property insurance 84 108 130Miscellaneous 2,372 1,217 3,060

Total cash family living expense 57,910 47,572 65,562Family living from the farm 220 171 122Total family living 58,130 47,743 65,684

Other Nonfarm ExpendituresIncome taxes 15,522 8,421 19,699Furnishing & appliance purchases 2,990 1,491 2,910Nonfarm vehicle purchases 3,156 1,668 5,581Nonfarm real estate purchases 1,517 -7,023 925Other nonfarm capital purchases 10,675 2,455 1,577Nonfarm savings & investments 6,618 7,468 14,576

Total other nonfarm expenditures 40,479 14,479 45,268

Total cash family livinginvestment & nonfarm capital purch 98,388 62,051 110,830


20

Operator and Labor InformationSouthwest Minnesota Farm Business Management Association




Operator InformationAverage number of operators 1.2 1.1 1.4Average age of operators 50.1 46.5 53.0Average number of years farming 27.1 21.5 30.0

Results Per OperatorWorking capital 339,907 59,131 740,886Total assets (market) 1,905,969 965,145 2,648,643Total liabilities 762,222 414,537 1,051,238Net worth (market) 1,143,746 550,608 1,597,405Net worth excl deferred liabs 1,392,965 664,148 1,935,275

Gross farm income 737,236 261,201 1,427,434Total farm expense 528,182 207,215 1,046,943Net farm income 209,053 53,986 380,491

Net nonfarm income 21,715 36,206 5,361Family living & tax withdrawals 60,977 50,511 63,538

Total acres owned 208.2 127.5 260.0Total crop acres 712.0 341.1 1,033.8Crop acres owned 179.7 114.4 224.1Crop acres cash rented 470.9 188.1 730.7Crop acres share rented 61.5 38.6 79.1Total pasture acres 9.3 17.4 13.7

Labor AnalysisNumber of farms 107 21 22Total unpaid labor hours 2,196 1,613 2,679Total hired labor hours 1,726 254 5,579Total labor hours per farm 3,923 1,867 8,258Unpaid hours per operator 1,895 1,473 1,965Value of farm production / hour 165.39 127.76 163.24Net farm income / unpaid hour 110.30 36.66 193.68Average hourly hired labor wage 13.42 11.93 12.69

Partnerships & LLCsNumber of farms 11 1 5Number of operators 2.1 - 2.0Owner withdrawals per farm - - -Withdrawals per operator - - -

CorporationsNumber of farms 5 1 2Number of operators 1.8 - -


21

Nonfarm SummarySouthwest Minnesota Farm Business Management Association




Nonfarm IncomeNonfarm wages & salary 14,870 21,821 10,456Net nonfarm business income 2,929 8,650 406Nonfarm rental income 1,021 584 649Nonfarm interest income 1,627 2,700 1,218Nonfarm cash dividends 769 318 448Tax refunds 292 638 4Other nonfarm income 5,992 4,942 5,494

Total nonfarm income 27,501 39,654 18,674

Gifts and inheritances 9,121 2,556 9,830

Nonfarm Assets (market)Checking & savings 6,501 17,009 1,365Stocks & bonds 14,819 5,755 18,724Other current assets 1,765 99 124Furniture & appliances 10,804 10,462 9,586Nonfarm vehicles 12,343 10,469 12,155Cash value of life ins. 13,016 9,006 10,136Retirement accounts 41,185 18,922 26,376Other intermediate assets 15,762 1,274 3,521Nonfarm real estate 57,523 50,132 43,181Other long term assets 28,486 22,035 4,545

Total nonfarm assets 202,203 145,163 129,713

Nonfarm LiabilitiesAccrued interest 24 17 4Accounts payable 12,067 2,540 22,227Current notes 221 167 651Princ due on term debt 1,265 1,174 448

Total current liabilities 13,578 3,898 23,330Intermediate liabilities 2,739 2,677 611Long term liabilities 14,108 13,680 7,191Total nonfarm liabilities 30,425 20,254 31,133

Nonfarm net worth 171,778 124,908 98,581Nonfarm debt to asset ratio 15 % 14 % 24 %


22

Crop Reports

The Crop Enterprise Analysis tables show the average physical production, gross return, direct costs,overhead costs, and net returns per acre. There are potentially three tables for each crop dependingon the farmer's tenure on the land: owned land, cash rented land, and share rented land. Farms areclassified into low 20% or high 20% on the basis of net return per acre. The classification is doneseparately for each table.

Gross Return Per Acre includes the value of the crop produced plus any other income directlyassociated with production of the crop, including LDP payments, crop insurance proceeds and anydisaster payments that might have been received. It does not include direct and counter-cyclicalgovernment payments (see Net Return With Government Payments).

The Value Per Unit is assigned by the producer. For cash crops, the value is based on the actualsales price for production sold or contracted before year-end and the inventory value for crops stillin inventory at year-end. The local harvest-time price is used for forages and other feed crops.

Net Return Per Acre is the amount contributed toward operator labor, management, and equitycapital. Any wages and benefits paid to the operator are removed from labor costs (and added toLabor and Management Charge) so that all farms are on equal footing. Land costs include land renton the rented land pages but only actual interest paid and real estate taxes on owned land. For thisreason, net returns from owned and rented land should not be compared.

Net Return With Government Payments is the net return per acre after decoupled governmentpayments such as direct and counter-cyclical government payments have been added. Thesepayments are generally allocated evenly per acre across all crops except vegetables and pasture.

Net Return Over Labor and Management is the return, including government payments, remainingafter compensating the operator for unpaid labor and management. This is the per acre return toequity capital.

Cost of Production shows the average cost per unit produced in each cost category. Total Direct andOverhead Expense per Unit is the breakeven price needed to cover cash costs and depreciation. LessGovernment and Other Income is the breakeven price if government payments and anymiscellaneous income are used to offset some expenses. With Labor and Management is thebreakeven price to provide a labor and management return for the operator(s).

Machinery Cost Per Acre includes fuel and oil, repairs, custom hire, machinery lease payments,machinery depreciation, and interest on intermediate debt.

23

Crop Enterprise AnalysisSouthwest Minnesota Farm Business Management Association

(Farms Sorted By Net Return)

Corn on Owned Land


Number of fields 92 17 23Number of farms 68 13 14

Acres 107.26 89.81 90.09Yield per acre (bu.) 164.09 145.43 182.77Operators share of yield % 100.00 100.00 100.00Value per bu. 3.85 3.40 4.04Other product return per acre 0.08 0.50 -Total product return per acre 631.11 495.33 738.31Miscellaneous income per acre 2.35 3.55 1.93Gross return per acre 633.46 498.88 740.24

Direct ExpensesSeed 60.55 60.16 60.95Fertilizer 67.52 70.03 64.87Crop chemicals 22.27 22.76 21.43Crop insurance 13.19 13.89 15.82Drying fuel 3.36 4.52 3.00Fuel & oil 21.29 20.29 19.31Repairs 27.82 32.23 30.13Custom hire 0.77 3.91 -Hauling and trucking 0.14 - 0.52Marketing 1.63 8.12 0.11Operating interest 7.66 9.42 2.37Miscellaneous 0.98 0.04 0.52

Total direct expenses per acre 227.17 245.36 219.03Return over direct exp per acre 406.29 253.52 521.21

Overhead ExpensesCustom hire 5.53 5.05 5.24Hired labor 8.13 9.52 6.99Machinery leases 2.14 1.64 2.18RE & pers. property taxes 15.49 13.36 16.02Farm insurance 6.04 6.43 6.51Utilities 4.22 5.97 4.49Dues & professional fees 2.12 2.60 3.33Interest 39.72 49.11 23.84Mach & bldg depreciation 29.13 32.69 37.29Miscellaneous 3.65 3.12 2.49

Total overhead expenses per acre 116.17 129.49 108.37Total dir & ovhd expenses per acre 343.34 374.85 327.40Net return per acre 290.11 124.03 412.84

Government payments 20.76 19.09 21.99Net return with govt pmts 310.88 143.12 434.83Labor & management charge 47.78 46.96 46.90Net return over lbr & mgt 263.10 96.16 387.93

Cost of ProductionTotal direct expense per bu. 1.38 1.69 1.20Total dir & ovhd exp per bu. 2.09 2.58 1.79Less govt & other income 1.95 2.42 1.66With labor & management 2.24 2.74 1.92

Machinery cost per acre 86.50 96.61 91.45Est. labor hours per acre 2.90 2.85 3.71


24



Corn on Cash Rent




Direct ExpensesSeed 62.54 64.65 59.71Fertilizer 65.99 58.67 61.58Crop chemicals 22.39 21.33 24.64Crop insurance 16.24 18.26 15.62Drying fuel 3.07 4.54 1.59Storage 0.34 0.03 1.39Fuel & oil 20.18 19.69 17.93Repairs 24.91 25.04 26.16Custom hire 1.82 1.30 2.61Land rent 114.09 126.13 103.50Hauling and trucking 0.29 1.15 0.10Marketing 0.29 0.81 0.16Operating interest 9.13 12.26 4.56Miscellaneous 1.10 2.86 0.70


Overhead ExpensesCustom hire 3.86 1.91 2.83Hired labor 6.66 10.81 5.24Machinery leases 7.28 19.64 0.15Building leases 0.54 - -Farm insurance 4.56 4.03 3.83Utilities 3.09 2.84 3.39Dues & professional fees 1.47 1.18 1.88Interest 5.70 7.65 4.58Mach & bldg depreciation 25.14 17.58 27.27Miscellaneous 3.04 3.40 2.39






25



Corn on Share Rent

Avg. OfAll Farms High 20%

Number of fields 32 8Number of farms 21 5

Acres 108.56 116.28Yield per acre (bu.) 153.03 156.22Operators share of yield % 58.86 72.09Value per bu. 3.87 4.09Total product return per acre 348.84 460.33Miscellaneous income per acre 3.57 -Gross return per acre 352.41 460.33

Direct ExpensesSeed 48.43 54.46Fertilizer 40.33 31.54Crop chemicals 22.02 41.66Crop insurance 9.65 11.97Drying fuel 1.99 4.05Fuel & oil 21.50 23.53Repairs 25.53 24.22Custom hire 1.61 -Marketing 0.53 -Operating interest 8.81 8.00Miscellaneous 5.58 19.35

Total direct expenses per acre 185.98 218.78Return over direct exp per acre 166.43 241.54

Overhead ExpensesCustom hire 4.56 3.72Hired labor 6.62 7.30Machinery leases 3.22 3.04Farm insurance 4.51 5.23Utilities 2.85 1.46Dues & professional fees 1.35 2.06Interest 4.07 3.20Mach & bldg depreciation 20.80 20.98Miscellaneous 2.17 1.20

Total overhead expenses per acre 50.16 48.18Total dir & ovhd expenses per acre 236.13 266.97Net return per acre 116.27 193.36

Government payments 10.76 10.99Net return with govt pmts 127.03 204.35Labor & management charge 36.04 28.11Net return over lbr & mgt 91.00 176.23

Cost of ProductionTotal direct expense per bu. 2.06 1.94Total dir & ovhd exp per bu. 2.62 2.37Less govt & other income 2.46 2.27With labor & management 2.86 2.52

Machinery cost per acre 78.17 77.64Est. labor hours per acre 2.48 1.58


26



Soybeans on Owned Land



Acres 98.31 119.69 81.51Yield per acre (bu.) 49.03 42.71 52.78Operators share of yield % 100.00 100.00 100.00Value per bu. 9.89 8.69 10.68Total product return per acre 485.09 370.96 563.73Miscellaneous income per acre 1.18 -0.98 -Gross return per acre 486.28 369.98 563.73

Direct ExpensesSeed 33.24 30.52 33.60Fertilizer 16.61 16.56 14.35Crop chemicals 19.98 18.71 23.08Crop insurance 11.03 10.93 10.87Storage 0.29 0.60 0.65Fuel & oil 16.66 15.96 15.19Repairs 22.47 27.65 19.00Custom hire 0.96 1.83 0.08Marketing 1.26 4.46 0.22Operating interest 5.73 4.73 2.35Miscellaneous 0.74 0.50 0.44


Overhead ExpensesCustom hire 4.59 1.56 3.81Hired labor 5.66 6.01 3.84Machinery leases 1.22 2.06 1.01RE & pers. property taxes 14.21 14.23 15.95Farm insurance 4.38 4.92 4.11Utilities 2.99 3.43 2.86Dues & professional fees 1.47 1.80 1.31Interest 42.63 36.90 20.98Mach & bldg depreciation 23.75 23.35 27.25Miscellaneous 2.38 2.39 1.85






28



Soybeans on Cash Rent



Acres 125.60 138.41 131.19Yield per acre (bu.) 49.28 48.09 52.90Operators share of yield % 100.00 100.00 100.00Value per bu. 10.09 8.84 10.95Total product return per acre 497.04 425.03 579.02Miscellaneous income per acre 1.88 3.95 1.78Gross return per acre 498.91 428.98 580.80

Direct ExpensesSeed 33.53 33.56 30.76Fertilizer 16.21 21.17 11.81Crop chemicals 18.75 17.97 19.07Crop insurance 12.30 14.89 11.71Fuel & oil 16.23 17.82 18.13Repairs 19.84 22.66 16.42Custom hire 1.22 0.05 2.05Land rent 114.02 133.67 106.77Hauling and trucking 0.20 0.21 0.61Marketing 0.79 3.17 0.32Operating interest 7.33 9.27 6.66Miscellaneous 1.28 1.61 1.57


Overhead ExpensesCustom hire 3.18 5.55 3.52Hired labor 5.92 14.49 6.12Machinery leases 4.27 7.46 6.73Farm insurance 3.71 3.49 3.43Utilities 2.41 2.83 2.47Dues & professional fees 1.21 1.97 0.76Interest 4.66 5.90 5.16Mach & bldg depreciation 19.69 18.34 19.00Miscellaneous 2.96 3.57 2.38






29



Soybeans on Share Rent

Avg. OfAll Farms High 20%

Number of fields 27 9Number of farms 21 5

Acres 105.34 99.58Yield per acre (bu.) 45.33 46.80Operators share of yield % 57.35 69.80Value per bu. 10.27 10.38Total product return per acre 267.05 338.95Miscellaneous income per acre 0.88 -Gross return per acre 267.93 338.95

Direct ExpensesSeed 21.13 26.15Fertilizer 8.33 13.06Crop chemicals 10.66 14.38Crop insurance 6.41 9.44Fuel & oil 15.89 17.38Repairs 19.37 16.38Marketing 0.18 0.57Operating interest 5.53 5.86Miscellaneous 4.74 11.13

Total direct expenses per acre 92.24 114.35Return over direct exp per acre 175.68 224.61

Overhead ExpensesCustom hire 4.04 1.84Hired labor 4.68 2.55Machinery leases 5.69 2.34Farm insurance 3.22 4.07Utilities 2.04 1.95Dues & professional fees 1.11 1.21Interest 2.66 2.88Mach & bldg depreciation 15.01 12.83Miscellaneous 2.03 1.27

Total overhead expenses per acre 40.48 30.94Total dir & ovhd expenses per acre 132.73 145.28Net return per acre 135.20 193.67

Government payments 11.29 14.65Net return with govt pmts 146.49 208.32Labor & management charge 29.12 30.05Net return over lbr & mgt 117.37 178.27

Cost of ProductionTotal direct expense per bu. 3.55 3.50Total dir & ovhd exp per bu. 5.11 4.45Less govt & other income 4.64 4.00With labor & management 5.76 4.92

Machinery cost per acre 60.48 51.71Est. labor hours per acre 2.06 1.97


30



Oats on Owned Land

Avg. OfAll Farms

Number of fields 6Number of farms 6

Acres 18.75Yield per acre (bu.) 94.38Operators share of yield % 100.00Value per bu. 2.68Other product return per acre 10.40Total product return per acre 263.52Miscellaneous income per acre 53.37Gross return per acre 316.89

Direct ExpensesSeed 15.64Fertilizer 13.14Crop chemicals 3.39Fuel & oil 14.92Repairs 15.86Operating interest 3.37Miscellaneous 0.99

Total direct expenses per acre 67.31Return over direct exp per acre 249.58

Overhead ExpensesCustom hire 7.70Hired labor 5.97RE & pers. property taxes 16.61Farm insurance 4.21Utilities 1.85Dues & professional fees 1.34Interest 13.55Mach & bldg depreciation 20.91Miscellaneous 1.86

Total overhead expenses per acre 73.99Total dir & ovhd expenses per acre 141.30Net return per acre 175.59

Government payments 15.85Net return with govt pmts 191.44Labor & management charge 24.27Net return over lbr & mgt 167.17

Cost of ProductionTotal direct expense per bu. 0.71Total dir & ovhd exp per bu. 1.50Less govt & other income 0.65With labor & management 0.91

Machinery cost per acre 58.11Est. labor hours per acre 1.92


32



Oats on Cash Rent

Avg. OfAll Farms


Acres 16.64Yield per acre (bu.) 92.46Operators share of yield % 100.00Value per bu. 2.55Other product return per acre 32.45Total product return per acre 268.23Miscellaneous income per acre 46.18Gross return per acre 314.42

Direct ExpensesSeed 15.51Fertilizer 16.82Crop chemicals 3.04Fuel & oil 12.24Repairs 12.13Custom hire 3.59Land rent 92.02Operating interest 7.99Miscellaneous 0.04


Overhead ExpensesCustom hire 5.59Hired labor 5.29Machinery leases 0.66Farm insurance 1.98Utilities 1.38Dues & professional fees 0.11Interest 0.74Mach & bldg depreciation 12.34Miscellaneous 0.99



Cost of ProductionTotal direct expense per bu. 1.77Total dir & ovhd exp per bu. 2.08Less govt & other income 1.06With labor & management 1.30



33



Corn Silage on Owned Land

Avg. OfAll Farms


Acres 75.22Yield per acre (ton) 20.05Operators share of yield % 100.00Value per ton 25.66Total product return per acre 514.61Miscellaneous income per acre -Gross return per acre 514.61

Direct ExpensesSeed 60.23Fertilizer 44.90Crop chemicals 16.77Crop insurance 10.23Fuel & oil 30.84Repairs 33.90Custom hire 4.97Operating interest 7.36Miscellaneous 8.00


Overhead ExpensesCustom hire 35.97Hired labor 8.55Machinery leases 0.21Building leases 1.32RE & pers. property taxes 17.89Farm insurance 2.70Utilities 2.29Dues & professional fees 0.56Interest 48.54Mach & bldg depreciation 29.19Miscellaneous 5.44



Cost of ProductionTotal direct expense per ton 10.83Total dir & ovhd exp per ton 18.44Less govt & other income 17.44With labor & management 18.30



34



Corn Silage on Cash Rent

Avg. OfAll Farms



Direct ExpensesSeed 64.16Fertilizer 63.46Crop chemicals 25.78Crop insurance 10.50Storage 0.22Fuel & oil 37.28Repairs 26.47Land rent 103.76Operating interest 9.69Miscellaneous 3.55








35



Hay, Alfalfa on Owned Land

Avg. OfAll Farms



Direct ExpensesSeed 2.03Fertilizer 16.42Crop chemicals 6.70Crop insurance 2.36Fuel & oil 28.95Repairs 29.52Operating interest 5.08Miscellaneous 2.91








36



Hay, Alfalfa on Cash Rent

Avg. OfAll Farms



Direct ExpensesSeed 7.49Fertilizer 58.79Crop chemicals 4.26Crop insurance 1.60Fuel & oil 34.26Repairs 20.19Custom hire 6.81Land rent 99.24Operating interest 6.27Miscellaneous 7.28


Overhead ExpensesCustom hire 6.89Hired labor 13.36Machinery leases 4.25Building leases 0.11Farm insurance 3.89Utilities 1.76Interest 3.68Mach & bldg depreciation 24.48Miscellaneous 2.90






37



Hay, Grass on Owned Land

Avg. OfAll Farms



Direct ExpensesSeed 0.84Fuel & oil 10.49Repairs 11.59Operating interest 4.19


Overhead ExpensesCustom hire 2.82Hired labor 2.44RE & pers. property taxes 14.08Farm insurance 2.22Utilities 1.46Dues & professional fees 0.55Interest 42.95Mach & bldg depreciation 11.68Miscellaneous 2.15


Government payments -Net return with govt pmts 26.79Labor & management charge 18.68Net return over lbr & mgt 8.11




38



Hay, Grass on Cash Rent

Avg. OfAll Farms



Direct ExpensesFertilizer 43.73Crop chemicals 8.75Fuel & oil 12.22Repairs 7.51Land rent 23.36Operating interest 4.20Miscellaneous 6.28


Overhead ExpensesHired labor 11.11Machinery leases 0.95Farm insurance 1.99Utilities 0.69Interest 1.37Mach & bldg depreciation 12.75Miscellaneous 0.44


Government payments -Net return with govt pmts 130.30Labor & management charge 17.06Net return over lbr & mgt 113.24




39



Pasture on Owned Land

Avg. OfAll Farms


Acres 34.91Yield per acre (aum) 3.66Operators share of yield % 100.00Value per aum 10.73Total product return per acre 39.26Miscellaneous income per acre -Gross return per acre 39.26

Direct ExpensesSeed 1.02Fertilizer 3.06Crop chemicals 1.72Fuel & oil 2.62Repairs 3.51Operating interest 0.67


Overhead ExpensesCustom hire 0.71Hired labor 1.32Machinery leases 0.23RE & pers. property taxes 8.43Farm insurance 0.65Utilities 0.49Interest 24.49Mach & bldg depreciation 2.10Miscellaneous 0.36

Total overhead expenses per acre 38.78Total dir & ovhd expenses per acre 51.38Net return per acre -12.13

Government payments 1.44Net return with govt pmts -10.69Labor & management charge 3.66Net return over lbr & mgt -14.35

Cost of ProductionTotal direct expense per aum 3.45Total dir & ovhd exp per aum 14.04Less govt & other income 13.65With labor & management 14.65



40



Pasture on Cash Rent

Avg. OfAll Farms


Acres 87.39Yield per acre (aum) 1.88Operators share of yield % 100.00Value per aum 10.32Total product return per acre 19.37Miscellaneous income per acre 2.92Gross return per acre 22.29

Direct ExpensesCrop chemicals 5.39Fuel & oil 2.39Repairs 2.59Land rent 18.34Operating interest 0.92Miscellaneous 0.19

Total direct expenses per acre 29.80Return over direct exp per acre -7.51

Overhead ExpensesCustom hire 0.55Hired labor 0.63Interest 0.25Mach & bldg depreciation 1.48Miscellaneous 1.16

Total overhead expenses per acre 4.08Total dir & ovhd expenses per acre 33.88Net return per acre -11.59

Government payments -Net return with govt pmts -11.59Labor & management charge 3.06Net return over lbr & mgt -14.64

Cost of ProductionTotal direct expense per aum 15.88Total dir & ovhd exp per aum 18.05Less govt & other income 16.50With labor & management 18.12



41



CRP on Owned Land

Avg. OfAll Farms


Acres 31.52Yield per acre ($) 95.57Operators share of yield % 100.00Value per $ 1.00Total product return per acre 95.57Miscellaneous income per acre -Gross return per acre 95.57

Direct ExpensesSeed 0.55Fuel & oil 1.89Repairs 3.24Organic certification 0.27Operating interest 0.70


Overhead ExpensesHired labor 0.55RE & pers. property taxes 18.73Farm insurance 0.64Utilities 0.55Interest 50.83Mach & bldg depreciation 15.26Miscellaneous 0.65


Government payments -Net return with govt pmts 1.73Labor & management charge 5.54Net return over lbr & mgt -3.81

Cost of ProductionTotal direct expense per $ 0.07Total dir & ovhd exp per $ 0.98Less govt & other income 0.98With labor & management 1.04



42

Livestock ReportsThe Livestock Enterprise Analysis tables show the average physical production, gross returns, directcosts, overhead costs, and net returns per budget unit. Consistent with statewide trends, fewer and fewerAssociation farms have livestock. In order to provide more complete information, the livestockenterprise reports include farms from both the Southwestern and Southeastern Associations.

The “Dairy” table contains the information for only the milking herd (which includes dry cows). “DairyReplacement Heifers” are those heifers kept for replacement into the milking herd. “Dairy Steers”includes only steers for feeding. The “Dairy and Replacement Heifers” table is for the whole herd andincludes those farms in the “Dairy” and “Dairy Replacement Heifers” tables; it does not include “DairySteers.”

Gross Return is the accrual gross value produced by the enterprise. It includes income from sale ofoffspring and livestock products, cull income, non-cash transfers to other enterprises, and the value ofproduction used in the home or for feed. It also includes the value of inventory change from beginningto the end of the year. The cost of livestock purchased and the value of animals transferred in arededucted.

Net Return is the amount contributed by a unit of the enterprise toward operator labor, management,and equity capital. Any wages and benefits paid to the operator are removed from labor costs (andadded to Labor and Management Charge) so that all farms are on equal footing.

Net Return Over Labor and Management is the return remaining after compensating the operatorfor unpaid labor and management. This is the per unit return to equity capital.

Cost of Production section shows the average cost per unit sold in each cost category. Total directand overhead expense per unit is the breakeven price needed to cover cash costs and depreciation.For grow/finish enterprises, this includes the purchase cost or transfer in value of the animal. Withother revenue adjustments is the breakeven price adjusted for cull sales, other offspring sales, thecost of replacement stock, and any other miscellaneous income. This assumes that some costs canbe covered by these other income sources. With labor and management is the final breakeven priceto provide a labor and management return for the operator(s).

Other Information contains both economic and technical efficiency measures for each enterprise. Rounding of individual items for the report may have caused minor discrepancies with the calculatedtotals. If fewer than 5 farms have a certain livestock enterprise, that information is not reported.If there are fewer than 25 farms, the high and low groups are not reported.

43

Livestock Enterprise AnalysisSouthwest Minnesota Farm Business Management Association

(Farms Sorted By Net Return Per Unit)

Hogs, Farrow To Finish -- Average Per Litter

Avg. OfAll Farms

Number of farms 8

Quantity ValueRaised Hogs sold (lb) 1,718.25 793.70Cull sales (lb) 142.28 49.55Butchered (lb) 0.28 0.13Less purchased (lb) -64.30 -65.21Inventory change (lb) 17.47 -16.05Total production (lb) 1,813.98 762.12Other income 12.17Gross return 774.28

Direct ExpensesCorn (bu.) 84.58 265.87Oats (bu.) 0.79 2.10Protein Vit Minerals (lb.) 1,404.16 272.58Other feed stuffs 56.47 3.18Breeding fees 12.75Veterinary 48.58Supplies 40.89Fuel & oil 21.46Repairs 15.67Custom hire 41.24Bedding 1.63Operating interest 11.76

Total direct expenses 737.70Return over direct expense 36.58


Total overhead expenses 218.93Total dir & ovhd expenses 956.64Net return -182.35

Labor & management charge 95.29Net return over lbr & mgt -277.64

Cost of ProductionTotal direct expense per cwt. 40.67Total dir& ovhd expense per cwt. 52.74With other revenue adjustments 54.04With labor and management 59.30

Est. labor hours per unit 9.92

Other InformationAverage number of sows 114.4Litters farrowed 243Litters per sow 2.13Litters per crate 8.24Pigs born per litter 10.59Pigs weaned per litter 9.33Pigs weaned per sow 19.32Number sold per litter 6.74Lbs of feed / lb of gain 3.43Feed cost / cwt. of gain 29.97Feed cost per litter 543.72Avg wgt/Raised Hog sold 255Avg price / cwt 46.19


44



Hogs, Farrow To Finish -- Average Per Cwt. Produced

Avg. OfAll Farms

Number of farms 8

Quantity ValueRaised Hogs sold (lb) 94.72 43.75Cull sales (lb) 7.84 2.73Butchered (lb) 0.02 0.01Less purchased (lb) -3.54 -3.59Inventory change (lb) 0.96 -0.88Total production (lb) 100.00 42.01Other income 0.67Gross return 42.68

Direct ExpensesCorn (bu.) 4.66 14.66Oats (bu.) 0.04 0.12Protein Vit Minerals (lb.) 77.41 15.03Other feed stuffs 3.11 0.18Breeding fees 0.70Veterinary 2.68Supplies 2.25Fuel & oil 1.18Repairs 0.86Custom hire 2.27Bedding 0.09Operating interest 0.65







Other InformationAverage number of sows 114.4Litters farrowed 243Litters per sow 2.13Litters per crate 8.24Pigs born per litter 10.59Pigs weaned per litter 9.33Pigs weaned per sow 19.32Number sold per litter 6.74Lbs of feed / lb of gain 3.43Feed cost / cwt. of gain 29.97Feed cost per litter 543.72Avg wgt/Raised Hog sold 255Avg price / cwt 46.19


45



Hogs, Weaning to Finish -- Average Per Head

Avg. OfAll Farms

Number of farms 6

Quantity ValueWean-Fin Pig sold (lb) 263.04 125.08Butchered (lb) 0.01 0.00Less purchased (lb) -14.58 -43.34Inventory change (lb) 0.10 0.53Total production (lb) 248.57 82.27Other income 2.01Gross return 84.29

Direct ExpensesCorn (bu.) 9.10 31.19Complete Ration (lb.) 24.91 6.69Protein Vit Minerals (lb.) 60.19 11.48Other feed stuffs 6.16 9.58Veterinary 2.86Supplies 0.80Contract production exp. 3.17Fuel & oil 1.52Repairs 1.38Custom hire 0.44Hauling and trucking 0.41Operating interest 1.01


Overhead ExpensesCustom hire 0.29Hired labor 4.67Building leases 5.26Farm insurance 0.76Utilities 0.89Interest 1.68Mach & bldg depreciation 2.07Miscellaneous 0.91





Other InformationNo. purchased or trans in 27,841Number sold or trans out 24,549Percentage death loss 7.0Avg. daily gain (lbs) 1.34Lbs of conc / lb of gain 2.42Lbs of feed / lb of gain 2.81Feed cost per cwt of gain 23.71Feed cost per head 58.94Average purchase weight 13Average sales weight 258Avg purch price / head 37.43Avg sales price / cwt 47.55


46



Hogs, Weaning to Finish -- Average Per Cwt. Produced

Avg. OfAll Farms

Number of farms 6

Quantity ValueWean-Fin Pig sold (lb) 105.82 50.32Butchered (lb) 0.00 0.00Less purchased (lb) -5.87 -17.44Inventory change (lb) 0.04 0.21Total production (lb) 100.00 33.10Other income 0.81Gross return 33.91

Direct ExpensesCorn (bu.) 3.66 12.55Complete Ration (lb.) 10.02 2.69Protein Vit Minerals (lb.) 24.21 4.62Other feed stuffs 2.48 3.86Veterinary 1.15Supplies 0.32Contract production exp. 1.27Fuel & oil 0.61Repairs 0.56Custom hire 0.18Hauling and trucking 0.17Operating interest 0.41


Overhead ExpensesCustom hire 0.11Hired labor 1.88Building leases 2.12Farm insurance 0.31Utilities 0.36Interest 0.68Mach & bldg depreciation 0.83Miscellaneous 0.37





Other InformationNo. purchased or trans in 27,841Number sold or trans out 24,549Percentage death loss 7.0Avg. daily gain (lbs) 1.34Lbs of conc / lb of gain 2.42Lbs of feed / lb of gain 2.81Feed cost per cwt of gain 23.71Feed cost per head 58.94Average purchase weight 13Average sales weight 258Avg purch price / head 37.43Avg sales price / cwt 47.55


47



Hogs, Contractee -- Average Per Pig Space

Avg. OfAll Farms

Number of farms 13

Quantity ValueTotal production (hd) 0.00 0.00Other income 36.75Gross return 36.75

Direct ExpensesSupplies 3.66Contract production exp. 0.39Fuel & oil 1.75Repairs 1.71Custom hire 0.87Operating interest 0.34



Total overhead expenses 20.16Total dir & ovhd expenses 28.87Net return 7.87

Labor & management charge 4.69Net return over lbr & mgt 3.19

Cost of ProductionTotal direct expense per head -Total dir& ovhd expense per head -With other revenue adjustments -With labor and management -


Other InformationNumber of pigs 5,416Pigs per pig space (per year) 2.18Pigs per 100 sq. ft. (per yr) 28.16Net return per 100 sq. ft. 101.78Net return per labor hour 19.00Square feet per pig space 7.74


48



Beef Cow-Calf -- Average Per Cow

Avg. OfAll Farms

Number of farms 10

Quantity ValueBeef Calves sold (lb) 129.63 142.16Transferred out (lb) 304.58 365.55Cull sales (lb) 158.42 90.29Butchered (lb) 2.38 1.19Less purchased (lb) -51.01 -56.20Less transferred in (lb) -100.91 -100.78Inventory change (lb) 13.65 75.96Total production (lb) 456.72 518.16Other income 1.28Gross return 519.44

Direct ExpensesCorn (bu.) 10.82 37.19Corn Silage (lb.) 5,082.41 52.46Hay, Alfalfa (lb.) 2,584.75 113.46Hay, Grass & Other (lb.) 1,505.55 68.35Oats (bu.) 0.55 1.42Pasture (aum) 1.50 25.08Stover (lb.) 521.39 5.68Complete Ration (lb.) 56.26 7.65Protein Vit Minerals (lb.) 140.02 25.35Other feed stuffs 38.08 2.77Breeding fees 14.79Veterinary 43.57Supplies 21.37Fuel & oil 28.90Repairs 28.63Bedding 10.49Operating interest 15.81


Overhead ExpensesCustom hire 12.22Hired labor 9.42Machinery leases 5.90RE & pers. property taxes 2.27Farm insurance 8.20Utilities 12.94Dues & professional fees 5.42Interest 7.57Mach & bldg depreciation 23.76Miscellaneous 3.24





Other InformationNumber of cows 63.1Pregnancy percentage 96.8Pregnancy loss percentage 3.4Culling percentage 12.2Calving percentage 93.5Weaning percentage 87.4Calves sold per cow 0.76Calf death loss percent 8.6Average weaning weight 538Lbs weaned/exposed female 470Feed cost per cow 339.41Avg wgt/Beef Calf sold 610Avg price / cwt 109.66


49



Beef, Finish Beef Calves -- Average Per Head

Avg. OfAll Farms

Number of farms 11

Quantity ValueFinish Beef sold (lb) 1,342.12 1,228.20Transferred out (lb) 19.60 19.73Butchered (lb) 5.63 5.09Less purchased (lb) -648.92 -743.27Less transferred in (lb) -45.83 -57.34Inventory change (lb) 2.83 47.19Total production (lb) 675.42 499.61Other income 2.47Gross return 502.08

Direct ExpensesCorn (bu.) 53.23 173.73Corn Silage (lb.) 3,769.35 43.33Hay, Alfalfa (lb.) 334.00 15.89Hay, Grass & Other (lb.) 263.78 9.35Protein Vit Minerals (lb.) 283.50 54.58Corn Distillers Grn (dry) (lb.) 92.55 4.84Corn Gluten (lb.) 1,073.04 25.55Other feed stuffs 249.06 7.85Veterinary 8.01Supplies 9.74Fuel & oil 8.79Repairs 11.02Hauling and trucking 11.04Marketing 6.43Operating interest 36.50


Overhead ExpensesCustom hire 6.44Hired labor 4.20Machinery leases 2.93Farm insurance 2.70Utilities 2.92Interest 12.07Mach & bldg depreciation 14.59Miscellaneous 3.46





Other InformationNo. purchased or trans in 324Number sold or trans out 301Percentage death loss 0.9Avg. daily gain (lbs) 2.48Lbs of conc / lb of gain 6.59Lbs of feed / lb of gain 9.56Feed cost per cwt of gain 49.62Feed cost per head 335.11Average purchase weight 623Average sales weight 1,314Avg purch price / cwt 114.54Avg sales price / cwt 91.51


50



Beef, Finish Beef Calves -- Average Per Cwt. Produced

Avg. OfAll Farms

Number of farms 11

Quantity ValueFinish Beef sold (lb) 198.71 181.84Transferred out (lb) 2.90 2.92Butchered (lb) 0.83 0.75Less purchased (lb) -96.08 -110.05Less transferred in (lb) -6.79 -8.49Inventory change (lb) 0.42 6.99Total production (lb) 100.00 73.97Other income 0.37Gross return 74.34

Direct ExpensesCorn (bu.) 7.88 25.72Corn Silage (lb.) 558.07 6.42Hay, Alfalfa (lb.) 49.45 2.35Hay, Grass & Other (lb.) 39.05 1.38Protein Vit Minerals (lb.) 41.97 8.08Corn Distillers Grn (dry) (lb.) 13.70 0.72Corn Gluten (lb.) 158.87 3.78Other feed stuffs 36.88 1.16Veterinary 1.19Supplies 1.44Fuel & oil 1.30Repairs 1.63Hauling and trucking 1.63Marketing 0.95Operating interest 5.40







Other InformationNo. purchased or trans in 324Number sold or trans out 301Percentage death loss 0.9Avg. daily gain (lbs) 2.48Lbs of conc / lb of gain 6.59Lbs of feed / lb of gain 9.56Feed cost per cwt of gain 49.62Feed cost per head 335.11Average purchase weight 623Average sales weight 1,314Avg purch price / cwt 114.54Avg sales price / cwt 91.51


51



Dairy -- Average Per Cow

Avg. OfAll Farms

Number of farms 5

Quantity ValueMilk sold (lb) 23,601.00 4,380.07Milk used in home (lb) 5.49 1.31Milk fed to animals (lb) 67.82 8.36Dairy Calves sold (hd) 0.36 88.19Transferred out (hd) 0.60 154.41Cull sales (hd) 0.26 149.77Butchered (hd) 0.00 0.45Less transferred in (hd) -0.35 -507.82Inventory change (hd) 0.03 46.26Total production 4,321.00Other income 18.90Gross return 4,339.90

Direct ExpensesCorn (bu.) 86.37 294.95Corn Silage (lb.) 13,184.96 166.80Hay, Alfalfa (lb.) 4,203.76 264.01Haylage, Alfalfa (lb.) 1,819.55 68.23Wheat, Spring (bu.) 3.67 29.03Protein Vit Minerals (lb.) 4,631.19 721.48Corn Gluten (lb.) 1,571.31 23.27Cottonseed (lb.) 540.44 52.08Other feed stuffs 304.84 31.63Breeding fees 28.75Veterinary 97.60Supplies 155.43DHIA 4.84Fuel & oil 73.65Repairs 83.27Hauling and trucking 29.15Bedding 19.61

Total direct expenses 2,143.78Return over direct expense 2,196.12

Overhead ExpensesCustom hire 129.72Hired labor 462.81Farm insurance 30.69Utilities 42.29Interest 45.47Mach & bldg depreciation 125.47Miscellaneous 34.73

Total overhead expenses 871.19Total dir & ovhd expenses 3,014.97Net return 1,324.93

Labor & management charge 196.75Net return over lbr & mgt 1,128.18



Other InformationAvg. number of Cows 266.0Milk produced per Cow 23,674Culling percentage 26.4Turnover rate 32.3Percent of barn capacity 122.1Lbs. milk/lb grain & conc. 2.0Feed cost per cwt of milk 6.98Feed cost per Cow 1,651.48Avg. milk price per cwt. 18.56


52



Dairy Replacement Heifers -- Average Per Head Sold/Trans

Avg. OfAll Farms

Number of farms 5

Quantity ValueReplacements sold (hd) 0.12 42.24Transferred out (hd) 0.88 1,241.05Less transferred in (hd) -1.45 -372.03Inventory change (hd) 0.25 379.52Total production (hd) 0.00 1,290.78Other income -Gross return 1,290.78

Direct ExpensesCorn (bu.) 37.99 129.55Corn Silage (lb.) 8,297.10 109.46Hay, Alfalfa (lb.) 5,647.43 287.93Haylage, Alfalfa (lb.) 960.14 36.01Oats (bu.) 3.50 9.27Pasture (aum) 0.51 9.51Stover (lb.) 225.18 9.01Complete Ration (lb.) 67.40 38.13Milk Replacer (lb.) 5.62 11.68Protein Vit Minerals (lb.) 1,038.47 159.74Other feed stuffs 498.55 14.09Breeding fees 24.54Veterinary 51.02Supplies 18.72Fuel & oil 27.81Repairs 34.52


Overhead ExpensesCustom hire 105.55Hired labor 157.88Farm insurance 10.40Utilities 15.68Interest 19.34Mach & bldg depreciation 49.53Miscellaneous 12.39

Total overhead expenses 370.77Total dir & ovhd expenses 1,341.77Net return -50.99


Cost of ProductionTotal direct expense per head 963.50Total dir& ovhd expense per head 1,334.27With other revenue adjustments 1,334.27With labor and management 1,401.88


Other InformationNo. purchased or trans in 161Number sold or trans out 110Average number of head 263Percentage death loss 5.9Feed cost per average head 341.34Feed cost/head sold+trans 814.39Avg. purchase weight -Avg. sales weight -Avg. purch price / head -Avg. sales price / head 353.24


53

Summary Tables

Financial Summary by Years

A better picture of the current profitability, liquidity and solvency conditions can be seen bycomparing this year to previous years in the Summary by Years table. All items are taken fromthe annual report for that year. Monetary values are left in nominal terms unadjusted forinflation. The one exception is the Net Farm Income (Constant $) using the Consumer PriceIndex (CPI-U) from the U.S. Department of Commerce. This shows the changes in “buyingpower” for the farmers, compared to the current year. The CPI used is reported below.

CPI-U CPI-UYear 1982-84=100 Year 1982-84=1001988 118.3 1998 163.01988 124.0 1999 166.61990 130.7 2000 172.21991 136.2 2001 177.01992 140.3 2002 179.91993 144.5 2003 184.01994 148.2 2004 188.91995 152.4 2005 195.31996 156.9 2006 201.61997 160.5 2007 207.3

Financial Summary by County

This table summarizes whole-farm financial performance by county. Counties are grouped byproximity and similar crop production potential.

Financial Summary by Farm Size (Gross Farm Income)

This table summarizes whole-farm financial performance by size of farm. Farms are categorizedbased on gross farm income.

Financial Summary by Farm Type

This table summarizes whole-farm financial performance by type of farm. Farm type is assignedbased on greater than 70 percent of sales from that commodity or combination of commodities.

Financial Summary by Debt To Asset Ratio

This table summarizes whole-farm financial performance by debt level. Farms are categorizedbased on total farm and nonfarm Debt To Asset Ratio.

Financial Summary by Age of Operator

This table summarizes whole-farm financial performance based on age of the primary operator.

55

Row Items 1988 1989 1990 1991 1992 1993 1994 1995 1996----------------- ----------------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ----

1 Number of Farms 202 203 200 207 201 202 202 216 203

Farm Income Statement2 Gross Cash Farm Income 262,229 265,019 291,839 288,031 301,907 296,705 306,175 346,838 382,5023 Total Cash Farm Expense 206,433 204,939 222,201 221,385 236,768 242,616 256,246 277,214 299,6104 Inventory Change 20,577 11,788 22,242 -10,822 -429 4,474 9,254 16,939 12,2315 Depr. & Cap. Adj. -21,370 -21,709 -26,876 -26,122 -27,051 -26,997 -27,268 -29,288 -32,4246 Net Farm Income 55,004 50,159 65,004 29,702 37,659 31,567 31,915 57,276 62,699

7 Net Farm Income (Constant $) 96,385 83,855 103,101 45,207 55,643 45,286 44,642 77,909 82,839

Profitability and Liquidity Analysis ** ** ** **8 Labor and Management Earnings 39,866 33,078 47,215 11,281 19,467 16,681 16,949 41,326 45,206

Rate of return on:9 Average Assets (%) 13 10 12 5 7 5 5 10 10

10 Average Equity (%) 16 11 15 3 6 2 3 13 1211 Operating Profit Margin (%) 22 19 23 12 14 12 12 22 2112 Asset Turnover Rate (%) 58 49 53 43 46 40 41 46 4813 Value of Farm Production 246,893 233,867 264,282 225,829 244,243 191,194 207,729 247,690 277,02614 Farm Interest Paid 14,546 15,489 17,126 17,061 17,943 15,667 17,837 22,084 22,33715 Cash Expense as a % of Income 79 77 76 77 78 82 84 80 78

Interest Paid as a % of:16 Gross Cash Income 6 6 6 6 6 5 6 6 617 Total Cash Expenses 7 8 8 8 8 6 7 8 718 Yrs. to T/O Non R.E. Debt 1.4 2.2 1.9 3.3 2.6 1.8 2.6 1.3 1.2

Comparative Financial Statement (Market Basis) ** ** ** **19 No. of Sole Proprietors 182 179 180 187 180 178 179 184 17320 Total Ending Assets 468,616 506,988 557,912 579,629 596,525 844,030 901,807 944,208 982,75021 Total Ending Liabilities 172,714 186,956 202,626 216,189 227,131 396,899 431,390 452,253 462,50522 Ending Net Worth 295,902 320,032 355,286 363,440 369,394 447,132 470,418 491,955 520,24523 Ending Farm C+I Debt to Asset % 35 35 36 41 44 38 39 38 3724 Ending Total Debt to Asset % 37 37 36 37 38 47 48 48 47

Acreage Information25 Total Acres Owned 222 237 237 241 251 252 267 256 24926 Total Crop Acres Farmed 525 568 561 570 586 600 612 625 65827 Crop Acres Owned 186 199 191 200 203 204 204 211 20428 Crop Acres Cash Rented 238 269 275 274 286 299 323 340 38429 Crop Acres Share Rented 101 100 95 96 96 97 86 74 70

Crop Yields30 Corn per acre 89 141 128 125 126 61 143 119 13331 Soybean per acre 32 43 45 38 38 20 46 43 42

Crop Prices Received (cash sales)32 Corn per Bushel 2.08 2.20 2.30 2.26 2.20 2.11 2.24 2.30 3.0433 Soybeans per Bushel 6.80 6.57 5.69 5.41 5.39 5.84 5.94 5.56 6.84

Household Information34 No. Farms Reporting HseHld Info 120 129 126 145 136 131 134 151 13135 Average Family Size 3.8 3.9 3.9 4.0 4.1 3.9 3.8 3.7 3.736 Total Family Use of Cash 37,556 44,214 46,587 48,911 45,638 45,897 42,179 43,315 47,584

37 Average Net Nonfarm Income 6,890 11,973 12,135 10,803 12,329 12,354 13,515 16,014 16,954

* Not available.** Starting with 1993, profitability is analyzed using assets valued on the cost basis and the financial statement uses fair market value. From 1979

through 1992, profitability and solvency are analyzed using land valued with a conservative market value and all other assets valued on a cost basis.

SUMMARY OF THE WHOLE FARM ANALYSIS BY YEARSSouthwestern Minnesota Farm Business Management Association

(Overall averages for all farms reporting)

56

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Row ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----

208 210 216 212 207 188 175 125 107 110 107 1

359,710 369,573 388,731 422,897 433,698 428,084 504,022 496,771 579,201 609,886 731,897 2303,241 305,344 324,802 348,711 358,506 352,995 400,605 404,743 477,476 494,409 592,841 319,769 -21,057 15,633 25,296 -17,297 19,571 18,977 31,076 74,307 66,397 135,843 4

-35,640 -34,557 -35,800 -17,731 -21,280 -24,654 -25,990 -24,741 -28,170 -27,176 -32,631 540,598 8,616 43,762 81,750 36,614 70,007 96,404 98,362 147,862 154,698 242,267 6

52,436 10,958 54,453 98,413 42,882 80,670 108,612 107,943 156,947 159,072 242,267 7

** ** ** ** ** ** ** ** ** ** **23,364 -8,757 26,896 62,532 16,094 47,628 71,108 73,058 116,809 118,404 195,584 8

6 2 7 12 6 9 11 11 14 13 17 95 -6 7 19 4 11 16 16 21 19 25 10

14 4 16 27 14 20 24 23 28 28 35 1144 39 43 45 39 44 44 46 51 48 50 12

262,396 250,717 274,411 313,232 282,583 345,743 379,505 378,450 478,073 512,081 648,768 1322,282 25,358 27,488 27,002 27,203 26,739 25,262 21,824 22,210 27,677 30,714 14

84 83 84 82 83 82 79 81 82 81 81 15

6 7 7 6 6 6 5 4 4 5 4 167 8 8 8 8 8 6 5 5 6 5 17

3.3 2.5 2.5 2.1 2.4 3.4 1.7 2.4 2.2 1.6 1.5 18

** ** ** ** ** ** ** ** ** ** **180 183 185 181 178 161 149 109 91 93 91 19

1,016,308 1,066,565 1,061,579 1,150,838 1,158,071 1,277,823 1,407,919 1,286,775 1,487,232 1,694,428 2,034,365 20490,140 522,994 517,040 545,689 539,918 578,253 619,279 554,962 618,105 698,239 810,184 21526,168 543,571 544,539 605,149 618,197 699,570 788,640 731,813 869,127 996,189 1,224,181 22

44 45 43 42 45 43 41 41 40 38 33 2348 49 49 47 47 45 44 43 42 41 40 24

233 250 241 250 252 265 263 236 241 243 241 25648 697 709 730 759 784 794 766 792 797 825 26200 219 204 214 214 226 239 193 199 197 208 27381 402 430 445 468 490 489 494 532 526 546 2867 76 75 70 77 68 67 79 61 74 71 29

126 161 156 150 128 151 157 171 192 169 162 3042 49 45 46 42 49 39 41 55 51 49 31

2.39 1.97 1.66 1.68 1.72 1.95 2.07 2.28 1.89 2.04 3.00 327.13 5.72 4.59 4.57 4.32 4.57 5.73 7.17 5.88 5.57 7.14 33

123 122 125 120 124 108 102 73 67 66 60 343.7 3.6 3.6 3.5 3.5 3.6 3.4 3.4 3.4 3.3 3.1 35

58,051 48,197 50,326 62,349 63,980 51,826 68,470 68,029 74,513 82,670 98,388 36

18,982 17,475 20,275 24,692 23,043 23,083 27,742 27,075 30,266 41,615 36,622 37

SUMMARY OF THE WHOLE FARM ANALYSIS BY YEARS (continued)Southwestern Minnesota Farm Business Management Association

(Overall averages for all farms reporting)

57


(Farms Sorted By County)

Brown

Faribault Pipestone

Avg. Of Martin Lyon Rock

All Farms Watonwan Cottonwood Jackson Murray Nobles Yelow Med Redwood

Number of farms 107 11 15 16 20 19 14 8

Income Statement

Gross cash farm income 731,897 699,962 495,124 774,880 732,432 646,158 1,146,415 590,647Total cash farm expense 592,841 557,977 384,024 652,770 572,453 498,761 1,013,688 446,179Net cash farm income 139,055 141,984 111,100 122,110 159,978 147,397 132,727 144,468Inventory change 135,843 160,664 148,335 148,508 186,710 141,953 72,610 42,537Depreciation and capital adjust -32,631 -34,964 -24,604 -36,803 -30,842 -29,907 -36,512 -23,164Average net farm income 242,267 267,684 234,832 233,814 315,846 259,443 168,825 163,841Median net farm income 199,745 251,461 174,706 230,407 237,343 153,774 152,857 137,033

Profitability (cost)

Labor and management earnings 195,584 220,486 194,138 179,872 265,550 217,228 119,762 129,914Rate of return on assets 17.4 % 19.2 % 18.3 % 15.1 % 22.5 % 19.3 % 11.9 % 14.1 %Rate of return on equity 25.0 % 27.7 % 27.7 % 20.4 % 31.3 % 30.4 % 16.0 % 21.8 %Operating profit margin 34.8 % 33.3 % 39.0 % 33.1 % 40.0 % 36.7 % 29.2 % 32.7 %Asset turnover rate 50.0 % 57.6 % 46.8 % 45.5 % 56.2 % 52.5 % 40.6 % 43.1 %

Liquidity

Ending current ratio 2.44 3.82 2.48 2.59 2.28 2.61 1.52 1.87Ending working capital 265,457 290,957 341,721 292,577 287,465 266,260 75,394 209,509End working capital to gross inc 36.3 % 41.6 % 69.0 % 37.8 % 39.2 % 41.2 % 6.6 % 35.5 %Term debt coverage ratio 410.3 % 410.4 % 530.4 % 385.9 % 677.1 % 331.0 % 230.9 % 286.0 %Expense as a percent of income 67.8 % 64.6 % 59.3 % 70.7 % 60.7 % 62.7 % 83.0 % 69.8 %Interest as a percent of income 3.7 % 4.1 % 4.5 % 3.3 % 3.7 % 3.6 % 3.2 % 6.2 %

Solvency (market)

Number of sole proprietors 91 9 14 15 17 16 10 6Ending farm assets 1,799,123 1,863,968 1,737,848 1,765,891 1,610,965 2,103,881 1,493,028 1,822,521Ending farm liabilities 764,600 697,040 825,863 632,909 753,468 908,381 689,799 885,634Ending total assets 2,034,365 2,122,059 1,861,685 2,006,686 1,862,487 2,407,855 1,744,484 1,976,747Ending total liabilities 810,184 748,345 874,448 696,206 801,351 945,596 732,429 900,006Ending net worth 1,224,181 1,373,713 987,237 1,310,481 1,061,136 1,462,260 1,012,055 1,076,741Net worth change 252,175 264,055 201,048 267,788 235,518 282,615 149,383 309,952Ending farm debt to asset ratio 42 % 37 % 48 % 36 % 47 % 43 % 46 % 49 %Beg total debt to asset ratio 41 % 37 % 48 % 36 % 45 % 38 % 43 % 53 %End total debt to asset ratio 40 % 35 % 47 % 35 % 43 % 39 % 42 % 46 %

Nonfarm Information

Net nonfarm income 25,164 27,645 21,135 27,386 25,141 34,778 6,100 24,175Farms reporting living expenses 66 9 12 11 12 11 6 2Total family living expense 56,229 59,551 59,497 52,581 52,353 50,830 64,827 -Total living, invest, & capital 94,373 101,496 78,069 131,606 90,997 67,722 101,405 -

Crop Acres

Total acres owned 241 291 275 286 274 208 107 205Total crop acres 825 1,039 866 770 939 809 614 551Total crop acres owned 208 245 266 200 210 204 122 165Total crop acres cash rented 546 785 461 540 615 542 442 358Total crop acres share rented 71 9 139 31 113 63 50 28


58


(Farms Sorted By Gross Farm Income)

Avg. Of 100,001 - 250,001 - 500,001 - OverAll Farms 250,000 500,000 1,000,000 1,000,000

Number of farms 107 19 44 26 16

Income StatementGross cash farm income 731,897 194,168 370,732 721,792 2,463,062Total cash farm expense 592,841 134,903 258,750 560,026 2,178,834Net cash farm income 139,055 59,266 111,982 161,766 284,228Inventory change 135,843 62,850 91,586 185,081 281,577Depreciation and capital adjust -32,631 -16,437 -24,545 -32,332 -76,871Average net farm income 242,267 105,679 179,023 314,514 488,934Median net farm income 199,745 82,629 166,746 320,268 404,295

Profitability (cost)Labor and management earnings 195,584 77,504 147,456 260,742 385,232Rate of return on assets 17.4 % 13.1 % 17.7 % 20.4 % 16.1 %Rate of return on equity 25.0 % 16.6 % 26.7 % 28.7 % 23.3 %Operating profit margin 34.8 % 36.3 % 37.0 % 37.6 % 30.6 %Asset turnover rate 50.0 % 36.0 % 47.7 % 54.2 % 52.6 %

LiquidityEnding current ratio 2.44 3.37 2.16 2.96 2.05Ending working capital 265,457 189,191 191,191 412,824 353,971End working capital to gross inc 36.3 % 97.4 % 51.6 % 57.2 % 14.4 %Term debt coverage ratio 410.3 % 440.0 % 369.8 % 567.0 % 353.0 %Expense as a percent of income 67.8 % 52.1 % 55.1 % 60.4 % 79.3 %Interest as a percent of income 3.7 % 4.5 % 5.2 % 3.5 % 3.0 %

Solvency (market)Number of sole proprietors 91 17 41 22 9Ending farm assets 1,799,123 1,218,756 1,538,663 2,187,642 3,490,317Ending farm liabilities 764,600 429,162 636,456 905,159 1,797,329Ending total assets 2,034,365 1,375,460 1,825,594 2,401,347 3,727,799Ending total liabilities 810,184 453,556 695,346 948,887 1,828,038Ending net worth 1,224,181 921,905 1,130,248 1,452,459 1,899,761Net worth change 252,175 194,633 227,034 294,972 420,704Ending farm debt to asset ratio 42 % 35 % 41 % 41 % 51 %Beg total debt to asset ratio 41 % 33 % 39 % 41 % 51 %End total debt to asset ratio 40 % 33 % 38 % 40 % 49 %

Nonfarm InformationNet nonfarm income 25,164 35,051 29,046 20,135 9,313Farms reporting living expenses 66 12 31 19 4Total family living expense 56,229 37,355 60,405 62,250 -Total living, invest, & capital 94,373 48,529 114,160 93,344 -

Crop AcresTotal acres owned 241 210 226 270 305Total crop acres 825 379 678 1,151 1,320Total crop acres owned 208 181 193 271 206Total crop acres cash rented 546 158 413 835 970Total crop acres share rented 71 39 72 46 145


59


(Farms Sorted By Farm Type)

Avg. Of Crop and Crop andAll Farms Crop Hog Hog Beef Other

Number of farms 107 63 5 7 8 18

Income StatementGross cash farm income 731,897 455,588 3,903,297 738,181 642,461 687,677Total cash farm expense 592,841 339,251 3,694,773 602,501 546,864 488,091Net cash farm income 139,055 116,337 208,524 135,680 95,596 199,586Inventory change 135,843 143,168 232,541 74,168 132,757 65,907Depreciation and capital adjust -32,631 -28,377 -93,797 -38,926 -18,290 -28,204Average net farm income 242,267 231,128 347,267 170,922 210,064 237,289Median net farm income 199,745 198,812 410,029 120,145 233,519 138,134

Profitability (cost)Labor and management earnings 195,584 191,180 211,089 127,348 182,157 191,392Rate of return on assets 17.4 % 19.8 % 9.0 % 12.8 % 20.6 % 17.2 %Rate of return on equity 25.0 % 27.8 % 11.6 % 17.0 % 36.1 % 25.3 %Operating profit margin 34.8 % 36.0 % 23.9 % 26.5 % 37.4 % 36.8 %Asset turnover rate 50.0 % 55.1 % 37.4 % 48.1 % 55.1 % 46.6 %

LiquidityEnding current ratio 2.44 2.98 1.98 1.77 1.95 1.43Ending working capital 265,457 315,590 301,779 127,233 178,760 77,442End working capital to gross inc 36.3 % 69.3 % 7.7 % 17.2 % 27.8 % 11.3 %Term debt coverage ratio 410.3 % 580.6 % 240.1 % 199.4 % 561.7 % 261.3 %Expense as a percent of income 67.8 % 55.5 % 89.4 % 73.6 % 69.6 % 64.2 %Interest as a percent of income 3.7 % 3.8 % 2.4 % 4.8 % 4.1 % 5.2 %

Solvency (market)Number of sole proprietors 91 56 2 5 6 16Ending farm assets 1,799,123 1,742,235 - 1,609,163 1,037,408 1,646,206Ending farm liabilities 764,600 678,215 - 761,427 533,415 794,126Ending total assets 2,034,365 1,973,609 - 1,870,273 1,159,935 1,855,865Ending total liabilities 810,184 726,366 - 806,558 573,020 834,984Ending net worth 1,224,181 1,247,243 - 1,063,715 586,915 1,020,882Net worth change 252,175 267,631 - 170,673 127,093 227,247Ending farm debt to asset ratio 42 % 39 % - % 47 % 51 % 48 %Beg total debt to asset ratio 41 % 38 % - % 38 % 53 % 49 %End total debt to asset ratio 40 % 37 % - % 43 % 49 % 45 %

Nonfarm InformationNet nonfarm income 25,164 30,982 -24,883 31,665 14,787 19,014Farms reporting living expenses 66 43 1 4 4 10Total family living expense 56,229 56,735 - - - 54,171Total living, invest, & capital 94,373 89,984 - - - 129,843

Crop AcresTotal acres owned 241 264 215 222 110 221Total crop acres 825 902 992 921 689 481Total crop acres owned 208 243 246 226 109 93Total crop acres cash rented 546 574 715 681 532 362Total crop acres share rented 71 84 31 14 48 26


60


(Farms Sorted By Debt To Asset Ratio)

Avg. Of Less thanAll Farms 20% 20% - 40% 40% - 60% 60% - 80%

Number of farms 107 14 31 45 16

Income StatementGross cash farm income 731,897 610,963 490,260 892,480 878,223Total cash farm expense 592,841 376,210 364,968 768,274 753,762Net cash farm income 139,055 234,753 125,292 124,206 124,461Inventory change 135,843 105,372 115,356 176,571 90,522Depreciation and capital adjust -32,631 -26,707 -29,759 -37,699 -30,047Average net farm income 242,267 313,418 210,889 263,077 184,937Median net farm income 199,745 206,342 198,812 232,650 167,911

Profitability (cost)Labor and management earnings 195,584 227,312 161,242 220,412 164,270Rate of return on assets 17.4 % 18.0 % 15.9 % 18.2 % 16.2 %Rate of return on equity 25.0 % 18.6 % 19.9 % 29.9 % 40.1 %Operating profit margin 34.8 % 41.8 % 36.6 % 32.9 % 31.5 %Asset turnover rate 50.0 % 43.2 % 43.4 % 55.2 % 51.3 %

LiquidityEnding current ratio 2.44 18.28 3.76 2.13 1.33Ending working capital 265,457 290,624 340,515 266,139 101,495End working capital to gross inc 36.3 % 47.6 % 69.5 % 29.8 % 11.6 %Term debt coverage ratio 410.3 % 2,106.1 % 529.4 % 347.2 % 235.8 %Expense as a percent of income 67.8 % 50.6 % 59.9 % 71.3 % 77.9 %Interest as a percent of income 3.7 % 0.3 % 2.6 % 4.1 % 5.9 %

Solvency (market)Number of sole proprietors 91 10 29 38 13Ending farm assets 1,799,123 2,435,627 1,691,244 1,868,762 1,407,082Ending farm liabilities 764,600 420,832 557,843 944,555 952,780Ending total assets 2,034,365 2,824,937 2,015,753 2,037,883 1,525,966Ending total liabilities 810,184 462,060 612,866 985,290 994,721Ending net worth 1,224,181 2,362,878 1,402,887 1,052,593 531,246Net worth change 252,175 534,797 236,299 218,847 180,219Ending farm debt to asset ratio 42 % 17 % 33 % 51 % 68 %Beg total debt to asset ratio 41 % 15 % 31 % 50 % 69 %End total debt to asset ratio 40 % 16 % 30 % 48 % 65 %

Nonfarm InformationNet nonfarm income 25,164 24,336 35,899 20,897 16,582Farms reporting living expenses 66 7 24 27 7Total family living expense 56,229 57,425 52,378 57,138 60,195Total living, invest, & capital 94,373 122,774 102,756 85,037 72,370

Crop AcresTotal acres owned 241 436 251 202 178Total crop acres 825 684 703 943 878Total crop acres owned 208 283 224 196 159Total crop acres cash rented 546 327 450 664 599Total crop acres share rented 71 74 29 84 121


61


(Farms Sorted By Age Of Operator)

Avg. Of LessAll Farms than 31 31 - 40 41 - 50 51 - 60 Over 60

Number of farms 107 5 17 24 47 14

Income StatementGross cash farm income 731,897 203,579 552,373 946,138 782,496 601,434Total cash farm expense 592,841 120,739 431,480 828,498 613,363 484,511Net cash farm income 139,055 82,839 120,893 117,641 169,133 116,923Inventory change 135,843 57,626 123,413 139,697 143,034 148,120Depreciation and capital adjust -32,631 -17,897 -27,911 -36,121 -35,296 -28,692Average net farm income 242,267 122,568 216,394 221,216 276,872 236,351Median net farm income 199,745 81,357 228,164 189,354 204,140 192,438

Profitability (cost)Labor and management earnings 195,584 111,395 188,232 177,685 219,598 184,644Rate of return on assets 17.4 % 22.7 % 21.6 % 15.6 % 17.2 % 17.1 %Rate of return on equity 25.0 % 53.2 % 35.9 % 24.1 % 23.7 % 21.8 %Operating profit margin 34.8 % 39.8 % 33.5 % 31.5 % 36.8 % 34.1 %Asset turnover rate 50.0 % 57.1 % 64.4 % 49.5 % 46.8 % 50.1 %

LiquidityEnding current ratio 2.44 1.80 2.45 2.16 2.36 5.55Ending working capital 265,457 91,127 248,257 191,271 332,521 250,639End working capital to gross inc 36.3 % 44.8 % 44.9 % 20.2 % 42.5 % 41.7 %Term debt coverage ratio 410.3 % 456.2 % 529.6 % 307.5 % 420.4 % 486.1 %Expense as a percent of income 67.8 % 50.2 % 63.0 % 76.3 % 65.5 % 63.6 %Interest as a percent of income 3.7 % 4.3 % 3.7 % 3.8 % 3.5 % 3.9 %

Solvency (market)Number of sole proprietors 91 5 15 18 43 10Ending farm assets 1,799,123 778,498 1,142,718 1,620,897 2,108,881 2,282,888Ending farm liabilities 764,600 469,622 611,341 726,192 914,037 568,538Ending total assets 2,034,365 870,080 1,230,358 1,840,859 2,400,379 2,596,974Ending total liabilities 810,184 486,607 644,493 780,329 962,366 619,866Ending net worth 1,224,181 383,473 585,864 1,060,530 1,438,013 1,977,108Net worth change 252,175 149,838 182,349 187,710 270,549 445,112Ending farm debt to asset ratio 42 % 60 % 53 % 45 % 43 % 25 %Beg total debt to asset ratio 41 % 54 % 56 % 44 % 41 % 25 %End total debt to asset ratio 40 % 56 % 52 % 42 % 40 % 24 %

Nonfarm InformationNet nonfarm income 25,164 23,924 17,152 7,821 36,864 25,793Farms reporting living expenses 66 2 11 15 30 8Total family living expense 56,229 - 39,785 57,742 65,086 51,181Total living, invest, & capital 94,373 - 48,494 79,123 125,294 86,571

Crop AcresTotal acres owned 241 68 89 211 302 339Total crop acres 825 384 807 902 824 877Total crop acres owned 208 45 103 185 258 268Total crop acres cash rented 546 295 644 613 503 545Total crop acres share rented 71 44 60 104 63 65


62

Corn Production Practices

The following pages summarize the costs and returns from for corn produced using variousproduction practices. Association members identify crop production practices when consistentpractices are used on the entire enterprise. For certain practices, they are asked to identify whenthe practice was not used to provide accurate comparison to conventional practices.

These tables include cash rented corn enterprises produced by Southwest Association membersfrom 2005-2007. Combining multiple years provides more instances for comparison andprovides results under a greater variety of growing conditions. Only enterprises produced oncash rented land are included to provide more complete land cost for economic analysis.

The production practices included are Tillage System, Row Width in inches, Roundup Readytechnology, and Bt technology. The final table compares corn enterprises for the past three yearsbased on total acres of corn grown on the entire farm.

63


Three Year Average 2005 - 2007(Farms Sorted By Tillage System)

Corn on Cash Rent

Avg. Of Chisel/ No Ridge StripAll Farms Reduced till till till

Number of fields 581 521 18 28 14Number of farms 249 218 7 18 9

Acres 128.84 125.25 130.97 172.29 173.03Yield per acre (bu.) 174.19 174.27 160.66 177.74 178.12Operators share of yield % 100.00 100.00 100.00 100.00 100.00Value per bu. 2.84 2.83 3.03 2.75 3.17Other product return per acre 0.05 0.06 - - -Total product return per acre 495.04 493.29 486.51 488.14 564.28Miscellaneous income per acre 25.09 25.55 12.91 31.22 12.28Gross return per acre 520.13 518.84 499.41 519.36 576.56

Direct ExpensesSeed 57.07 57.02 55.43 56.79 60.79Fertilizer 59.05 57.94 60.56 69.82 66.05Crop chemicals 24.18 24.00 25.27 27.52 21.28Crop insurance 11.24 10.86 15.41 12.39 15.19Drying fuel 6.71 6.93 5.39 5.55 4.41Storage 0.13 0.11 1.35 - -Fuel & oil 19.06 19.49 15.44 17.92 13.24Repairs 22.70 22.47 28.85 25.59 17.30Custom hire 1.72 1.90 1.75 0.15 -Land rent 106.82 107.22 109.74 103.01 100.65Hauling and trucking 0.25 0.21 - - 2.11Marketing 0.55 0.53 2.17 0.21 -Operating interest 8.31 7.94 9.42 8.64 16.45Miscellaneous 1.38 1.45 2.99 0.23 0.07

Total direct expenses per acre 319.17 318.06 333.78 327.81 317.55Return over direct exp per acre 200.96 200.78 165.64 191.55 259.01

Overhead ExpensesCustom hire 3.51 3.68 1.94 1.84 3.92Hired labor 6.43 5.90 9.98 11.13 7.75Machinery leases 6.24 6.24 - 12.40 0.15Building leases 0.78 0.89 - - 0.14Farm insurance 4.80 4.79 3.56 5.39 5.21Utilities 2.89 2.82 1.83 3.31 4.90Dues & professional fees 1.40 1.32 1.60 1.90 2.50Interest 5.21 5.44 2.82 3.77 4.30Mach & bldg depreciation 22.31 22.37 12.55 22.51 29.77Miscellaneous 2.99 2.96 3.61 2.32 4.29

Total overhead expenses per acre 56.57 56.42 37.89 64.56 62.92Total dir & ovhd expenses per acre 375.74 374.48 371.66 392.37 380.47Net return per acre 144.39 144.36 127.75 126.99 196.10

Government payments 28.73 28.69 25.28 30.02 30.45Net return with govt pmts 173.12 173.05 153.03 157.00 226.54Labor & management charge 36.77 35.62 44.33 39.78 54.24Net return over lbr & mgt 136.35 137.43 108.70 117.22 172.30

Cost of ProductionTotal direct expense per bu. 1.83 1.83 2.08 1.84 1.78Total dir & ovhd exp per bu. 2.16 2.15 2.31 2.21 2.14Less govt & other income 1.85 1.84 2.08 1.86 1.90With labor & management 2.06 2.04 2.35 2.09 2.20

Machinery cost per acre 77.83 78.83 63.23 78.57 63.56Est. labor hours per acre 2.40 2.36 2.66 2.70 2.67


64


Three Year Average 2005 - 2007(Farms Sorted By Row Width)

Corn on Cash Rent

Avg. Of 19 - 25 26 - 32 > 32All Farms

Number of fields 577 68 492 17Number of farms 248 28 209 11

Acres 130.38 120.78 133.93 66.30Yield per acre (bu.) 174.20 169.44 174.99 162.60Operators share of yield % 100.00 100.00 100.00 100.00Value per bu. 2.86 2.99 2.85 2.72Other product return per acre 0.05 - 0.06 -Total product return per acre 498.18 507.05 498.03 442.73Miscellaneous income per acre 25.81 23.51 25.99 32.05Gross return per acre 523.99 530.56 524.02 474.78

Direct ExpensesSeed 57.13 60.72 56.83 48.12Fertilizer 59.20 45.64 61.13 45.52Crop chemicals 24.29 20.97 24.70 24.73Crop insurance 11.41 9.44 11.71 8.28Drying fuel 6.84 4.45 7.00 14.43Fuel & oil 19.16 18.09 19.26 21.26Repairs 22.95 19.17 23.37 26.09Custom hire 1.74 0.95 1.87 0.01Land rent 106.98 105.30 107.61 82.91Marketing 0.54 0.20 0.59 0.56Operating interest 8.22 5.87 8.54 6.26Miscellaneous 1.75 1.83 1.74 1.91

Total direct expenses per acre 320.21 292.64 324.34 280.08Return over direct exp per acre 203.78 237.91 199.68 194.70

Overhead ExpensesCustom hire 3.46 5.81 3.19 1.86Hired labor 6.37 3.34 6.67 10.46Machinery leases 6.21 2.32 6.80 -Building leases 0.78 0.12 0.88 -Farm insurance 4.79 4.99 4.74 6.06Utilities 2.93 2.91 2.93 3.39Dues & professional fees 1.44 1.01 1.49 1.36Interest 5.16 2.95 5.39 8.08Mach & bldg depreciation 22.70 25.12 22.46 18.86Miscellaneous 3.06 3.33 3.00 4.75

Total overhead expenses per acre 56.90 51.90 57.55 54.83Total dir & ovhd expenses per acre 377.11 344.54 381.89 334.90Net return per acre 146.88 186.02 142.12 139.87

Government payments 28.58 28.49 28.61 27.93Net return with govt pmts 175.47 214.51 170.73 167.81Labor & management charge 37.18 32.12 37.72 42.47Net return over lbr & mgt 138.29 182.39 133.01 125.34

Cost of ProductionTotal direct expense per bu. 1.84 1.73 1.85 1.72Total dir & ovhd exp per bu. 2.16 2.03 2.18 2.06Less govt & other income 1.85 1.73 1.87 1.69With labor & management 2.07 1.92 2.09 1.95

Machinery cost per acre 78.38 71.26 79.37 72.87Est. labor hours per acre 2.41 2.34 2.40 3.79


65


Three Year Average 2005 - 2007(Farms Sorted By RoundUp Ready)

Corn on Cash Rent

Avg. Of 100% NoAll Farms RR RR


Acres 117.48 125.26 97.78Yield per acre (bu.) 172.37 170.34 178.96Operators share of yield % 100.00 100.00 100.00Value per bu. 2.89 3.06 2.37Other product return per acre 0.06 0.03 0.16Total product return per acre 498.07 520.91 423.99Miscellaneous income per acre 26.43 22.20 40.13Gross return per acre 524.49 543.11 464.12

Direct ExpensesSeed 57.09 59.36 49.75Fertilizer 58.59 60.37 52.82Crop chemicals 24.32 21.58 33.18Crop insurance 11.31 12.34 7.97Drying fuel 6.66 6.02 8.73Fuel & oil 19.37 19.21 19.88Repairs 23.02 22.85 23.57Custom hire 1.64 1.56 1.88Land rent 105.03 106.83 99.19Marketing 0.55 0.44 0.88Operating interest 8.56 8.87 7.54Miscellaneous 1.71 1.86 1.22


Overhead ExpensesCustom hire 3.60 3.64 3.47Hired labor 4.74 4.71 4.81Machinery leases 5.58 6.72 1.89Building leases 0.93 1.08 0.44Farm insurance 5.03 4.95 5.29Utilities 2.87 2.89 2.81Dues & professional fees 1.17 1.27 0.88Interest 4.86 5.07 4.20Mach & bldg depreciation 22.80 23.16 21.63Miscellaneous 2.99 2.83 3.52






66


Three Year Average 2005 - 2007(Farms Sorted By Bt Technology)

Corn on Cash Rent

Avg. Of 100% Bt No BtAll Farms w/ Refuge



Direct ExpensesSeed 57.31 57.64 45.90Fertilizer 59.58 60.00 45.01Crop chemicals 24.28 24.13 29.58Crop insurance 11.38 11.46 8.77Drying fuel 6.40 6.32 9.04Fuel & oil 19.24 19.13 23.17Repairs 23.19 23.15 24.63Custom hire 1.56 1.53 2.49Land rent 106.14 106.23 102.84Hauling and trucking 0.26 0.25 0.52Marketing 0.52 0.48 1.98Operating interest 8.36 8.34 9.19Miscellaneous 1.55 1.54 1.64








67


Three Year Average 2005 - 2007(Farms Sorted By Enterprise Size)

Corn on Cash Rent

Avg. Of Less than 51 - 101 - 251 - 501 - 1,001 -All Farms 50 100 250 500 1,000 1,500

Number of fields 636 8 39 193 212 161 21Number of farms 261 7 33 90 84 39 6

Acres 129.47 20.96 64.97 78.36 142.74 149.72 322.24Yield per acre (bu.) 174.20 155.28 167.23 175.88 177.61 167.16 176.76Operators share of yield % 100.00 100.00 100.00 100.00 100.00 100.00 100.00Value per bu. 2.83 2.63 2.78 2.62 2.93 2.94 2.67Other product return per acre 0.05 - - - 0.13 - -Total product return per acre 492.68 408.85 465.42 461.18 519.91 491.89 471.78Miscellaneous income per acre 27.11 24.69 40.66 29.73 22.74 27.67 24.71Gross return per acre 519.79 433.54 506.08 490.91 542.65 519.56 496.49

Direct ExpensesSeed 57.01 62.74 55.69 53.21 56.78 60.30 55.82Fertilizer 59.61 27.59 52.52 55.19 63.22 59.01 63.88Crop chemicals 24.39 29.85 28.87 26.27 24.38 23.02 24.85Crop insurance 11.21 7.66 9.55 7.83 12.80 11.50 9.69Drying fuel 6.44 11.44 9.92 8.24 5.60 6.59 2.79Fuel & oil 19.32 21.00 21.60 19.28 19.70 18.70 20.91Repairs 22.66 26.85 28.07 24.70 22.85 20.77 22.49Custom hire 1.59 1.30 1.40 2.09 1.92 0.91 1.30Land rent 107.06 93.68 93.01 97.22 104.01 109.91 118.72Utilities 0.01 0.54 - - 0.03 - -Hauling and trucking 0.23 - - 0.20 0.18 0.13 -Marketing 0.53 - 0.34 0.56 0.24 0.96 0.38Operating interest 8.17 6.09 7.86 7.70 9.27 7.57 6.03Miscellaneous 1.37 0.56 0.79 1.28 1.52 1.60 -

Total direct expenses per acre 319.61 289.29 309.61 303.76 322.48 320.96 326.87Return over direct exp per acre 200.18 144.25 196.46 187.15 220.17 198.60 169.62

Overhead ExpensesCustom hire 3.25 6.26 3.32 3.76 3.02 4.07 0.55Hired labor 6.29 2.05 5.22 5.03 6.27 3.45 9.66Machinery leases 5.94 4.57 1.11 0.79 4.20 11.87 4.33Building leases 0.78 - 0.07 0.77 0.44 1.15 1.64Farm insurance 4.93 4.17 6.19 4.92 5.18 4.42 6.72Utilities 2.94 2.46 4.12 3.64 3.11 2.36 2.41Dues & professional fees 1.39 2.00 1.08 1.44 1.44 0.73 2.34Interest 4.98 6.31 5.39 4.46 5.89 3.53 4.70Mach & bldg depreciation 22.27 29.66 24.78 25.47 25.56 17.76 18.14Miscellaneous 2.98 4.56 5.30 3.66 2.83 2.75 1.23

Total overhead expenses per acre 55.76 62.06 56.57 53.93 57.96 52.08 51.71Total dir & ovhd expenses per acre 375.36 351.35 366.18 357.70 380.44 373.04 378.58Net return per acre 144.43 82.19 139.89 133.22 162.21 146.52 117.91

Government payments 28.58 32.39 30.68 29.55 29.05 28.43 24.87Net return with govt pmts 173.01 114.58 170.58 162.77 191.26 174.95 142.78Labor & management charge 36.53 36.68 48.40 39.76 40.34 32.90 31.88Net return over lbr & mgt 136.48 77.90 122.17 123.01 150.92 142.05 110.90

Cost of ProductionTotal direct expense per bu. 1.83 1.86 1.85 1.73 1.82 1.92 1.85Total dir & ovhd exp per bu. 2.15 2.26 2.19 2.03 2.14 2.23 2.14Less govt & other income 1.83 1.90 1.76 1.70 1.85 1.90 1.86With labor & management 2.04 2.13 2.05 1.92 2.08 2.09 2.04

Machinery cost per acre 77.03 85.52 81.58 76.41 80.12 74.86 71.01Est. labor hours per acre 2.41 2.77 3.83 2.91 2.41 1.94 2.38


68

Soybean Production Practices

The following pages summarize the costs and returns for soybeans produced using variousproduction practices. Association members identify crop production practices when consistentpractices are used on the entire enterprise. For certain practices, they are asked to identify whenthe practice was not used to provide accurate comparison to conventional practices.

These tables include cash rented soybean enterprises produced by Southwest Associationmembers from 2005-2007. Combining multiple years provides more instances for comparisonand provides results under a greater variety of growing conditions. Only enterprises produced oncash rented land are included to provide more complete land cost for economic analysis. The production practices included are Tillage System, Row Width in inches, and RoundupReady technology. The final table compares soybean enterprises for the past three years basedon total acres of soybeans grown on the entire farm.

69


Three Year Average 2005 - 2007(Farms Sorted By Tillage System)


Avg. Of Chisel/ No RidgeAll Farms Reduced till till

Number of fields 515 429 57 25Number of farms 245 197 33 16

Acres 129.56 125.58 152.34 141.15Yield per acre (bu.) 51.49 51.47 51.08 52.55Operators share of yield % 100.00 100.00 100.00 100.00Value per bu. 7.22 7.24 7.07 6.83Total product return per acre 371.73 372.90 361.30 359.13Miscellaneous income per acre 2.96 3.41 1.16 0.93Gross return per acre 374.69 376.31 362.46 360.06

Direct ExpensesSeed 31.16 30.95 35.26 24.59Fertilizer 14.74 14.52 16.74 10.34Crop chemicals 20.50 20.23 21.03 23.93Crop insurance 10.52 10.03 12.05 13.60Fuel & oil 15.33 15.65 13.42 15.36Repairs 17.84 17.35 19.30 21.68Custom hire 1.46 1.47 2.03 0.14Land rent 106.43 106.45 107.30 106.67Marketing 0.83 0.87 0.28 1.78Operating interest 6.46 6.27 6.90 6.58Miscellaneous 1.33 1.46 0.86 0.36

Total direct expenses per acre 226.59 225.26 235.18 225.03Return over direct exp per acre 148.10 151.06 127.28 135.03

Overhead ExpensesCustom hire 2.89 3.06 2.31 1.61Hired labor 5.42 5.23 4.94 9.37Machinery leases 3.93 4.13 0.24 10.71Building leases 0.73 0.88 0.17 -Farm insurance 3.81 3.78 3.57 4.82Utilities 2.29 2.28 2.17 2.63Dues & professional fees 1.16 1.08 1.61 1.48Interest 4.06 4.22 3.52 3.12Mach & bldg depreciation 17.60 17.68 16.88 18.24Miscellaneous 2.44 2.49 2.23 1.94

Total overhead expenses per acre 44.33 44.81 37.65 53.93Total dir & ovhd expenses per acre 270.93 270.07 272.82 278.95Net return per acre 103.76 106.25 89.64 81.10

Government payments 27.09 27.19 25.61 31.15Net return with govt pmts 130.86 133.43 115.25 112.25Labor & management charge 29.14 27.90 34.80 32.92Net return over lbr & mgt 101.72 105.53 80.45 79.34

Cost of ProductionTotal direct expense per bu. 4.40 4.38 4.60 4.28Total dir & ovhd exp per bu. 5.26 5.25 5.34 5.31Less govt & other income 4.68 4.65 4.82 4.70With labor & management 5.24 5.19 5.50 5.32

Machinery cost per acre 60.70 61.28 55.39 65.91Est. labor hours per acre 1.93 1.92 1.87 2.31


70


Three Year Average 2005 - 2007(Farms Sorted By Row Width)


Avg. Of < 10 10 - 18 19 - 25 26 - 32All Farms

Number of fields 515 50 117 76 272Number of farms 244 24 57 31 138

Acres 129.89 116.31 155.20 128.40 121.92Yield per acre (bu.) 51.49 49.68 50.44 51.82 52.29Operators share of yield % 100.00 100.00 100.00 100.00 100.00Value per bu. 7.21 7.05 7.49 7.19 7.10Total product return per acre 371.33 350.41 377.85 372.42 371.11Miscellaneous income per acre 3.15 1.16 4.83 0.83 3.27Gross return per acre 374.48 351.56 382.68 373.24 374.38

Direct ExpensesSeed 31.18 37.89 33.47 28.84 29.44Fertilizer 14.80 15.54 15.55 13.07 14.76Crop chemicals 20.47 19.32 21.18 19.86 20.47Crop insurance 10.56 11.97 10.25 11.18 10.29Fuel & oil 15.30 12.49 16.84 15.25 14.96Repairs 17.85 18.53 17.41 15.55 18.64Custom hire 1.47 2.88 2.12 0.51 1.14Land rent 106.47 103.93 102.57 109.16 108.26Marketing 0.83 0.58 0.65 0.17 1.18Operating interest 6.47 6.18 6.23 4.80 7.13Miscellaneous 1.33 1.37 0.27 1.50 1.85

Total direct expenses per acre 226.72 230.68 226.53 219.90 228.14Return over direct exp per acre 147.76 120.88 156.15 153.34 146.24

Overhead ExpensesCustom hire 2.86 3.00 2.36 6.76 1.97Hired labor 5.38 4.13 3.57 3.81 7.04Machinery leases 3.92 2.51 1.98 1.15 6.05Building leases 0.73 0.38 0.93 0.06 0.87Farm insurance 3.83 3.96 3.12 4.54 3.98Utilities 2.28 2.13 2.00 2.54 2.40Dues & professional fees 1.16 1.71 0.57 1.13 1.39Interest 4.07 4.18 4.45 2.81 4.22Mach & bldg depreciation 17.64 17.01 15.69 19.56 18.26Miscellaneous 2.48 2.29 2.04 2.69 2.70

Total overhead expenses per acre 44.36 41.28 36.72 45.05 48.87Total dir & ovhd expenses per acre 271.08 271.97 263.26 264.95 277.01Net return per acre 103.40 79.59 119.42 108.29 97.37

Government payments 27.15 24.48 25.87 27.96 28.08Net return with govt pmts 130.55 104.07 145.30 136.26 125.45Labor & management charge 29.17 37.18 26.07 28.75 29.59Net return over lbr & mgt 101.38 66.90 119.23 107.51 95.86

Cost of ProductionTotal direct expense per bu. 4.40 4.64 4.49 4.24 4.36Total dir & ovhd exp per bu. 5.26 5.47 5.22 5.11 5.30Less govt & other income 4.68 4.96 4.61 4.56 4.70With labor & management 5.24 5.71 5.13 5.11 5.26

Machinery cost per acre 60.70 57.62 58.42 59.05 62.97Est. labor hours per acre 1.93 2.03 1.65 1.87 2.08


71


Three Year Average 2005 - 2007(Farms Sorted By RoundUp Ready)


Avg. Of 100% NoAll Farms RR RR


Acres 128.58 128.22 142.59Yield per acre (bu.) 51.47 51.39 54.31Operators share of yield % 100.00 100.00 100.00Value per bu. 7.24 7.29 5.69Total product return per acre 372.59 374.44 308.98Miscellaneous income per acre 3.12 2.97 8.39Gross return per acre 375.71 377.40 317.37

Direct ExpensesSeed 31.51 31.93 16.90Fertilizer 14.82 14.91 11.64Crop chemicals 20.31 19.93 33.39Crop insurance 10.58 10.62 9.38Fuel & oil 15.34 15.26 18.19Repairs 17.89 18.04 12.68Custom hire 1.49 1.47 2.21Land rent 106.42 106.75 95.35Hauling and trucking 0.17 0.13 1.49Marketing 0.84 0.86 0.06Operating interest 6.50 6.59 3.59Miscellaneous 1.18 1.16 1.96








72


Three Year Average 2005 - 2007(Farms Sorted By Enterprise Size)


Avg. Of Less than 51 - 101 - 251 - 501 -All Farms 50 100 250 500 1,000

Number of fields 566 14 39 227 184 99Number of farms 256 12 32 100 83 26

Acres 127.02 30.54 65.69 76.85 161.80 173.82Yield per acre (bu.) 51.72 48.77 51.66 51.94 52.07 50.54Operators share of yield % 100.00 100.00 100.00 100.00 100.00 100.00Value per bu. 7.12 7.97 6.94 7.14 6.94 7.61Total product return per acre 368.44 388.73 358.44 370.71 361.14 384.51Miscellaneous income per acre 3.05 0.46 11.23 2.00 0.79 6.30Gross return per acre 371.49 389.19 369.67 372.71 361.93 390.81

Direct ExpensesSeed 31.33 35.04 31.86 30.41 30.58 32.66Fertilizer 14.51 11.54 15.02 13.77 14.80 13.24Crop chemicals 20.69 20.47 22.45 20.72 21.78 19.31Crop insurance 10.50 7.30 13.07 9.85 10.04 12.11Fuel & oil 15.39 14.87 19.31 16.05 15.28 15.23Repairs 17.66 24.33 23.63 20.43 16.41 16.28Custom hire 1.48 0.53 1.96 1.81 0.99 1.92Land rent 106.50 102.42 92.05 98.66 105.00 110.14Hauling and trucking 0.16 - - 0.09 0.12 0.31Marketing 0.83 - 0.14 0.41 0.80 0.17Operating interest 6.41 4.49 5.95 7.33 6.59 5.19Miscellaneous 1.10 0.18 0.67 1.72 1.04 0.64

Total direct expenses per acre 226.57 221.17 226.11 221.25 223.42 227.20Return over direct exp per acre 144.92 168.03 143.56 151.45 138.51 163.61

Overhead ExpensesCustom hire 2.71 6.20 0.99 3.19 2.24 3.36Hired labor 5.24 2.44 3.17 3.89 5.04 3.20Machinery leases 3.76 1.38 1.44 2.60 2.88 5.49Building leases 0.73 0.05 0.08 0.35 0.74 1.40Farm insurance 3.90 3.97 4.80 4.07 4.04 3.99Utilities 2.30 2.47 3.66 2.93 2.21 1.64Dues & professional fees 1.12 1.50 1.29 1.09 0.97 0.52Interest 3.87 2.39 3.73 4.34 3.76 2.40Mach & bldg depreciation 17.41 22.87 18.99 20.44 19.53 11.44Miscellaneous 2.43 2.25 3.17 3.06 2.32 1.78

Total overhead expenses per acre 43.49 45.52 41.34 45.96 43.74 35.23Total dir & ovhd expenses per acre 270.06 266.69 267.46 267.21 267.16 262.43Net return per acre 101.43 122.50 102.21 105.50 94.77 128.38

Government payments 27.23 24.74 28.50 28.25 28.74 23.75Net return with govt pmts 128.66 147.24 130.71 133.74 123.51 152.13Labor & management charge 29.06 31.15 39.53 33.29 30.09 26.01Net return over lbr & mgt 99.60 116.10 91.17 100.45 93.43 126.12

Cost of ProductionTotal direct expense per bu. 4.38 4.53 4.38 4.26 4.29 4.50Total dir & ovhd exp per bu. 5.22 5.47 5.18 5.14 5.13 5.19Less govt & other income 4.64 4.95 4.41 4.56 4.56 4.60With labor & management 5.20 5.59 5.17 5.20 5.14 5.11

Machinery cost per acre 59.89 66.65 67.10 65.81 58.52 54.40Est. labor hours per acre 1.95 2.21 2.94 2.29 1.80 1.75


73

Appendix IWhole Farm Analysis Procedures and Measures

The whole-farm reports (except for the balance sheets) include the same number of farms,which were all of the farms whose records were judged to be of sufficient quality. The BalanceSheets include only sole proprietors; partnerships and corporations are excluded because somedebt is held outside of the business, causing potential misinterpretations of the average financialcondition. Rounding of individual items may have caused minor discrepancies between thoseitems and the printed totals which are calculated before rounding.

Financial Summary

This table summarizes key measures reported in several of the following tables.

Income Statement

This section summarizes key totals from the Income Statement table. Average Net Farm Incomeis the mean or average farm earnings of the group calculated on an accrual adjusted basis. Median Net Farm Income is the farm earnings of the median or middle farm in the group. If it islower than the average, the average earnings are skewed because some farms had much higherearnings than the rest of the group. If it is higher than the average, the average earnings areskewed because some farms had much lower earnings than the rest of the group.

Profitability

See the Profitability Measures section below for an explanation of these measures.

Liquidity

See the Financial Standards Measures and Liquidity Measures sections below for an explanationof these measures.

Solvency

This section summarizes key measures from the Balance Sheet reports. Only sole proprietors areincluded; partnerships and corporations are excluded because some assets and debts are heldoutside of the farm business, causing potential misinterpretations of the average financialcondition.

Nonfarm Information

This section summarizes non-farm earnings for all farms and family living withdrawals for thosesole proprietors who kept accurate family living records. More detail is included on theHousehold and Personal Expenses and Nonfarm Summary pages.

Crop Acres

This section summarizes acres used for cropping from the Crop Production and Marketing table.

75

Financial Standards Measures

This table contains the Farm Financial Standards Council’s 16 financial measures for evaluatinga farm's financial position and performance.

Liquidity

Current Ratio is calculated by dividing the total current farm assets by the total current farmliabilities.

Working Capital is calculated by subtracting current farm liabilities from current farm assets.

Solvency

Farm Debt to Asset Ratio is calculated by dividing the total farm liabilities by the total farmassets. It is similar to the total percent in debt ratio listed earlier. The difference is that nonfarmassets and liabilities are included in the total percent in debt but not in the farm debt to assetratio.

Farm Equity to Asset Ratio is calculated by dividing farm equity or net worth by the total farmassets. It measures the proportion of the farm assets financed by the owner's equity as opposedto debt. This is the opposite of the debt to asset ratio. These two measures always add up to100% because they describe how total farm assets are financed.

Farm Debt to Equity Ratio measures farm debt relative to farm equity. It is calculated bydividing the total farm liabilities by the total farm net worth. The debt to equity ratio measuresthe amount of borrowed capital being employed for every dollar of equity capital.

Profitability

Rate of Return on Farm Assets can be thought of as the average interest rate being earned on allinvestments in the farm or ranch business. If assets are valued at market value, the rate of returnon assets can be looked at as the “opportunity cost” of farming versus alternate investments. Ifassets are valued at cost value, the rate of return on assets more closely represents the actualreturn on the average dollar invested in the farm. The rate of return on farm assets is calculatedas follows: Rate of Return on Assets = Return on Farm Assets ÷ Average Farm Investment,where: Return on Farm Assets = Net Farm Income + Farm Interest - Value of Operator's Labor& Management, and Average Farm Investment = (Beginning Total Farm Assets + Ending TotalFarm Assets) ÷ 2.

Rate of Return on Farm Equity represents the interest rate being earned on farm net worth. Ifassets are valued at market value, this return can be compared to returns available if the assetswere liquidated and invested in alternate investments. If assets are valued at cost value, thismore closely represents the actual return on the funds that have been invested or retained in thebusiness. The rate of return on farm equity is calculated as follows: Rate of Return on Equity =Return on Farm Equity ÷ Average Farm Net Worth, where: Return on Farm Equity = Net FarmIncome - Value of Operator's Labor & Management, and Average Farm Net Worth = (BeginningFarm Net Worth + Ending Farm Net Worth) ÷ 2.

76

Operating Profit Margin is a measure of the operating efficiency of the business. It is calculatedas follows: Operating Profit Margin = Return to Farm Assets ÷ Value of Farm Production. Ifexpenses are held in line relative to the value of output produced, the farm will have a healthyoperating profit margin. A low net profit margin may be caused by low prices, high operatingexpenses, or inefficient production.

Net Farm Income represents the returns to unpaid labor, management, and equity capitalinvested in the business.

Repayment Capacity

Term Debt Coverage Ratio measures whether the business generated enough cash to cover termdebt payments. It is calculated by dividing the funds generated by the business for debtrepayment (net cash farm income + nonfarm income + interest expense - family living expense -income taxes) by total term debt payments (annual scheduled principal and interest payments onintermediate and long term debt). A ratio less than 100 percent indicates that the business didnot generate sufficient cash to meet scheduled payments in the past year. A ratio greater than100 indicates the business generated enough cash to pay all term debt payments.

Capital Replacement Margin is the amount of money remaining after all operating expenses,taxes, family living costs, and scheduled debt payments have been made. It is the cash generatedby the farm business that is available for financing capital replacement such as machinery andequipment. RankEm Central calculates the capital replacement margin by first adding interestdue on intermediate and long term loans to the amount available for principal payments. It thensubtracts scheduled principal and interest payments from this total.

Efficiency

Asset Turnover Rate is a measure of efficiency in using capital. It is calculated as follows: Asset Turnover Rate = Value of Farm Production ÷ Total Farm Assets.

The last four ratios reflect the distribution of gross income to cover operating expenses andgenerate farm income. The sum of the operating expense ratio, the depreciation expense ratio,and the interest expense ratio equals the percent of gross income used to pay business expenses. The amount remaining is net farm income. The gross farm income used to calculate these ratiosis the accrual gross farm income.

Operating Expense Ratio is calculated as (Total Farm Operating Expense - Farm InterestExpense) ÷ Gross Farm Income. This ratio indicates the percent of the gross farm income thatwas used to pay operating expenses. Total farm operating expense is the accrual total operatingexpense.

Depreciation Expense Ratio is calculated as Depreciation ÷ Gross Farm Income. This ratioindicates the percent of the gross farm income that was used to cover depreciation and othercapital adjustments.

Interest Expense Ratio is calculated as Farm Interest Expense ÷ Gross Farm Income. This ratioindicates the percent of the gross farm income used for farm interest expenses. This is the sameratio as the accrual interest as a percent of income from the Liquidity table.

77

Net Farm Income Ratio is calculated as Net Farm Income ÷ Gross Farm Income. This ratioindicates the percent of the gross farm income that remained after all expenses.

Farm Income Statement

The Farm Income Statement is a summary of income, expenses, and resultant profit or loss fromfarming operations during the calendar year. The first section lists cash farm income from allsources. The second section lists cash expenses. “Interest” includes only interest actually paid. No opportunity charges on farm equity capital or unpaid labor are included. The differencebetween Gross Cash Farm Income and Total Cash Expense is the Net Cash Farm Income. Thisis net farm income on a cash basis.

The third and fourth sections deal with noncash changes in the farm business. The InventoryChanges and Depreciation and Other Capital Adjustments sections are used to convert the cashincome statement (Net Cash Farm Income) derived from the first two sections into an accrualincome statement. The resulting “Net Farm Income” represents the return to the operator's andfamily's unpaid labor, management, and equity capital (net worth). In other words, it representsthe return to all of the resources which are owned by the farm family and, hence, not purchasedor paid a wage. However, it does not include any asset appreciation, debt forgiveness or assetrepossessions.

Inventory Changes

This is the detailed statement of inventory changes which is summarized in the Farm IncomeStatement. It includes beginning and ending inventories and the calculated changes.

Depreciation and Other Capital Adjustments

This is the detailed statement of depreciation and other capital adjustments which is summarizedin the Farm Income Statement. It includes beginning and ending inventories (valued at cost),sales, purchases, and depreciation.

The accounting method used for calculating depreciation was changed in 2000. Previously taxdepreciation was used. The new method is designed to estimate actual economic depreciationmore closely. This method depreciates machinery and equipment at 10 to 12% of beginning costbasis plus boot purchases less basis of sales items. For buildings and other improvements, thepercentage was 5 to 8%; for breeding livestock, the percentage varied between 20 to 25%.

Profitability Measures

Profitability is measured using assets valued first at cost and then at market. The reports includesix measures of profit followed by the values used to calculate the measures.

Net Farm Income is repeated from the Farm Income Statement report. When assets are valued atmarket, it includes the change in market valuation of capital for the year.

Labor and Management Earnings equals Net Farm Income minus an opportunity interest cost of6% on average farm net worth.

78

Rate of Return on Assets is the Return to Farm Assets divided by Average Farm Assets.

Rate of Return on Equity is the Return to Farm Equity divided by Average Farm Equity.

Operating Profit Margin is the Return to Farm Assets divided by Value of Farm Production.

Asset Turnover Rate is the Value of Farm Production divided by Average Farm Assets.

Interest on Farm Net Worth is the Average Farm Net Worth multiplied by a 6% opportunityinterest cost charge.

Farm Interest Expense is the accrued interest cost so it will be different from the cash interestpaid shown in the Farm Income Statement.

Value of Operator's Labor and Management is its opportunity cost. It is assigned by farm withinsuggested guidelines.

Return on Farm Assets is calculated by adding Farm Interest Expense and Net Farm Income andthen subtracting the Value of Operator's Labor and Management.

Average Farm Assets is the average of beginning and ending total farm assets for all farms, notjust those included in the Balance Sheet report.

Return to Farm Equity is calculated by subtracting the Value of Operator's Labor andManagement from Net Farm Income.

Average Farm Equity is the average of beginning and ending farm net worth.

Value of Farm Production is gross farm income minus feeder livestock and feed purchased andadjusted for inventory changes in crops, market livestock and breeding livestock.

Liquidity Measures

Net Cash Farm Income is from the Farm Income Statement.

Net Nonfarm Income is the average for all farms, not including Gifts and Inheritances.

Family Living and Taxes is the apparent total family expenses and income and social securitytaxes paid averaged for all farms, not just those included in the Household and PersonalExpenses report.

Real Estate Principal Payments are taken from the farmer's data.

Cash Available for Intermediate Debt Service (cash basis) is Total Net Income minus FamilyLiving and Taxes and Real Estate Principal Payments. Available for Intermediate Debt Service(accrual basis) is Net Accrual Operating Income plus Net Nonfarm Income and minus FamilyLiving and Taxes and Real Estate Principal Payments.

79

Average Intermediate Debt is the average of beginning and ending intermediate farm liabilities.

Years to Turn Over Intermediate Debt is Average Intermediate Debt divided by Cash Availablefor Intermediate Debt Service. If either the cash-based or accrual-based Cash Available forIntermediate Debt is a negative number, debt repayment is not possible because of negative cashflow and Years to Turn Over Intermediate Debt cannot be calculated.

Expense as a Percent of Income (cash basis) is Total Cash Expense divided by Gross Cash FarmIncome. Expense as a Percent of Income (accrual basis) is Total Accrual Farm Expense dividedby Total Accrual Farm Income.

Interest as a Percent of Income (cash basis) is Interest divided by Gross Cash Farm Income. Interest as a Percent of Income (accrual basis) is Interest minus beginning accrued interest plusending accrued interest divided by Total Accrual Farm Income.

Balance Sheets at Cost and Market Values

These tables include only sole proprietors; partnerships and corporations are excluded becausesome assets and debts are held outside of the farm business, causing potential misinterpretationsof the average financial condition.

Statement of Cash Flows

This table reports the sources from which cash was available or obtained and where that cashwas used or remains at the end of the year.

Crop Production and Marketing Summary

This table contains three sections. The first section reports average acreage by tenure andgeneral use. The next two sections show average price received from cash sales and averageyields for major crops.

Household and Personal Expenses

For those farms that kept records, the household and personal expenses are summarized in thistable. Since not all farms keep these records, the number of farms may be different for eachgroup. Averages are determined by the number of farms keeping these records.

Operator and Labor Information

This table has four sections. The first reports the averages for the number of operators per farm,the operator's age, and the number of years farming. The second section reports variousmeasures and results per operator compared to per farm in other reports.

80

The third section reports the amount of labor used and the returns to that labor. Total UnpaidLabor Hours and Total Hired Labor Hours are based on farmers’ estimates of labor use. Nolabor records are kept for unpaid labor. Value of Farm Production/Hour is the Value of FarmProduction divided by Total Labor Hours per Farm. Net Farm Income/Unpaid Hour is Net FarmIncome divided by Total Unpaid Labor Hours.

The fourth section reports the number of partnerships and withdrawals in each grouping.

Nonfarm Summary

This table reports the income from nonfarm sources which is included in a farmer's total netincome. Not all farms have nonfarm income, but the figure reported is the average over all farmsnot just those reporting nonfarm income. Also reported are the beginning and ending values fornonfarm assets for all farms (not just sole proprietors).

81

Appendix IICrop Enterprise Analysis Procedures and Measures

The Crop Enterprise Analysis tables show the profitability of each crop enterprise produced by five or more farms.

Gross Return is the average Yield multiplied by the Value Per Unit plus any other production orincome related to the crop. Value Per Unit for cash crops is the average sales price for cropssold before the end of the year and the average ending inventory value for crops remainingunsold. For feed crops, it is the estimated harvest-time value. LDP payments and othercommodity-specific income are added to estimate the total value received for crop production.

Direct Expenses include expenses that are directly related to the production of the specific crop. Most direct expenses are directly assigned to production of the crop and simply divided by acres. Some, such as Fuel and Oil and Repairs, which are difficult to assign directly to specific fields orcrops, are determined by allocating the total annual expense across all enterprises usingallocation factors entered for each crop.

Overhead Expenses are also determined by allocating the total annual expense across allenterprises using allocation factors entered for each crop.

Net Return per Acre is the Gross Return per Acre minus Total Direct and Overhead Expenses.

Net return with government payments is Net Return per Acre plus Government Payments. Government Payments includes only direct payments and counter-cyclical payments. Paymentsthat are directly attached to production of the crop, such as LDP and disaster payments areincluded in Gross Return. Because direct government payments have been decoupled fromactual production, these payments are generally allocated to all crops excluding vegetables andpasture. This is done for each farm by allocating the direct payments from the whole farm tothese crops.

Net Return over Labor and Management is calculated by allocating the farmer's charge forunpaid labor and management across all enterprises and subtracting it from Net Return WithGovernment Payments.

Cost of Production is calculated by dividing the total expense for each category by the yield peracre. Total Expense Less Government and Other Income is total expense minus governmentpayments, income from secondary products, and other income, divided by yield per acre.

Machinery Cost Per Acre is the sum of fuel and oil, repairs, custom hire expense, machinerylease payments, machinery depreciation, and interest on intermediate debt divided by acres.

Estimated Labor Hours Per Acre is calculated by allocating the farmer's estimate of totaloperator and hired labor hours for the year across all enterprises.

83

Rounding of individual items for the report may have caused minor discrepancies with thecalculated totals. If fewer than 5 farms have a certain crop enterprise, that information is notreported. If there are fewer than 25 farms, the high and low groups are not reported.

84

Appendix IIILivestock Enterprise Analysis Procedures and Measures

The Livestock Enterprise Analysis tables show the profitability of each livestock enterpriseproduced by five or more farms.

Gross Return includes product and livestock sales, cull sales, the value of offspring transferredout of the enterprise, the value of inventory change from beginning to end of year, and any otherincome assigned to the enterprise. Livestock purchases and the value of animals transferred infrom other enterprises are subtracted.

Direct Expenses include expenses that are directly related to the specific livestock enterprise. Feed and most other direct expenses are directly assigned based on farm records. Some, such asFuel and Oil and Repairs, which are difficult to assign directly to enterprises, are determined byallocating the total annual expense across all enterprises using allocation factors entered for eachfarm.

Overhead Expenses are also determined by allocating the total annual expense across allenterprises using allocation factors entered for each farm.

Net Return is the Gross Return minus Total Direct and Overhead Expenses.

Net Return over Labor and Management is calculated by allocating the farmer's charge forunpaid labor and management across all enterprises and subtracting it from Net Return.

Estimated Labor Hours is calculated by allocating the farmer's estimate of total operator andhired labor hours for the year across all enterprises.

Cost of Production is calculated by dividing the total expense for each category by TotalProduction. For grow/finish enterprises, the Purchases and Transfers In are included in directexpense. Cull sales, other offspring sales, and any other miscellaneous income are subtractedand replacement purchases and transfers in are added to arrive at the cost With other revenueadjustments. With Labor and Management is the cost with other revenue adjustments plus theproducer’s charge for operator’s labor and management. This is the breakeven price for theprimary product to provide a return for operator labor and management.

The last section of each livestock table contains both economic and technical efficiencymeasures. Lbs. feed per lb. of gain is the pounds of total feed divided by Total production. Forgrains, these pounds per bushel are used: corn, 56; oats, 32; barley, 48; grain sorghum, 56;wheat, 60; and millet, 48. For these forages, the units are converted to pounds and then adjustedby these factors: alfalfa haylage, 0.5; corn silage, 0.33; oatlage, 0.5; sorghum silage, 0.33; andsmall grain silage, 0.33.

85

The calving and weaning percentages are calculated as the number of calves which are calvedand weaned, respectively, divided by the number of cows which are supposed to bear young.

Rounding of individual items for the report may have caused minor discrepancies with thecalculated totals. If fewer than 5 farms have a certain livestock enterprise, that information is notreported. If there are fewer than 25 farms, the high and low groups are not reported.

86

Appendix IVPrices Used In the Analysis Report

Beginning Crop Enterprise EndingItem Inventory Feed Production InventoryAll Corn/bu. 3.30 3.40 Actual 4.22Oats/bu. 2.44 2.65 Actual 2.85All Wheat/bu. 4.05 5.60 Actual 9.34Soybeans/bu. 6.03 7.90 Actual 11.20

Alfalfa hay/t. (avg quality) 90.00 100.00 100.00 120.00Alfalfa hay/t. (dairy qual) 125.00 135.00 135.00 150.00Alfalfa haylage/t 62.00 70.00 70.00 75.00Grass/Mixed hay/r 90.00 95.00 95.00 100.00Corn silage/t. 18.00 21.00 21.00 25.00Oatlage/t. 12.00 14.00 16.00 16.00Oats straw/bale 1.70/75 2.00/80 2.65/100Cornstalks/t. 20.00 23.00 25.00 25.00

Actual prices estimated at actual selling price if sold or contracted, inventory price for balance. Allfeeds are valued on an as fed moisture basis. To correct for low-test weights on corn use: Bu. x testweight/56 lbs.

Other Prices Used:Pasture: $10.00/AUM Value of milk used in home $ .40/qt or $1.60/gallonValue of milk fed calves $ 1.50/gallon

Starting in 2000, depreciation is calculated by using an 5% rate for buildings, 10% for machinery,20% for beef cattle and sheep and 33% for breeding hogs and dairy cows. The economicdepreciation is calculated by taking the beginning basis, plus new purchases (boot), less basis of solditems multiplied by the appropriate percentage rate.

Value of operator's labor is calculated by using this formula: For sole proprietors and partnerships,labor and management is valued at $18,000 per operator plus 5% of the value of farm production,with a minimum of $30,000 for a full-time farm operator.

87

C:Documents and SettingsdaleMy DocumentsAssn · PDF fileQui Parle, McLeod, Mower, Rock,...

Documents

Transcript of C:Documents and SettingsdaleMy DocumentsAssn · PDF fileQui Parle, McLeod, Mower, Rock,...