The publication “Financial Characteristics of North Dakota Farms, 2001-2010” summarizes the performance of more than 500 farms enrolled in the North Dakota Farm Business Management Education program. The program uses 16 financial measures to evaluate liquidity, solvency, repayment capacity, profitability and financial efficiency.

Farms are grouped by region, type, size, gross cash sales, land tenure, profit, debt-to-asset ratio and age of farmer to look at relationships between financial performance and farm characteristics.

In 2010, median and average acreage per farm was 2,010 and 2,579, respectively. Farm gross cash revenue has doubled in the past decade. In 2010, the median and average was $469,023 and $631,920, respectively. More than 70 percent of the farms were crop farms.

“An unusually fortunate combination of events occurred in 2010 for North Dakota producers,” says Andy Swenson, North Dakota State University Extension Service farm management specialist. “Yields were very strong, with records set for corn and sugar beets, while wheat, barley and canola had the second highest in history. Grain prices improved during the small-grain harvest and continued upward the rest of the year. This provided additional profit opportunities for those who had inventories of 2009 crop year grain to sell. Also, per-acre costs of most crops were flat, federal disaster payments for the 2008 crop year were finally determined and paid in 2010, and higher livestock prices led to the largest year-to-year increase in beef cow-calf profit in two decades.”

Financial performance in 2010, 2008 and 2007 were much superior to other years in the 2001-2010 period. Overall performance was the worst in 2001. One measure of financial efficiency is the percentage of each dollar of gross revenue that is converted to profit. The highest median net farm income as a percent of gross revenue in a decade was 33 percent in 2010, while the lowest was 13 percent in 2009. It was 24 percent in 2008 and 31 percent in 2007 after ranging from 14 to 20 percent from 2001 to 2006.

The Red River Valley and crop farms typically had stronger profitability, solvency and repayment capacity than other regions and farm types. Exceptions were 2007 and 2009, when the north-central region had the best regional performance, and 2005, when the south-central region and livestock farms had a better performance.

Farms with sales less than $250,000 were more than three times more likely to have more than a 70 percent debt-to-asset ratio than farms with sales greater than $500,000.

“As expected, the percent of debts to assets decreased and the level of cropland ownership increased as farmers got older,” Swenson says. “The rate of return on equity was greater than the rate of return on assets, which indicates that debt capital was employed profitably, nine of the past 10 years for farms with sales greater than $500,000, but only twice by the farm group with less than $250,000 of sales.”

For a free copy of the publication, contact the NDSU Department of Agribusiness and Applied Economics, Dept. 7610, P.O. Box 6050, Fargo, ND 58108- 6050, or call (701) 231-7441.

This publication also may be obtained on the Web at http://agecon.lib.umn.edu/ (search for Financial Characteristics of North Dakota Farms, 2001 2010).

NDSU Agriculture Communication