MITCHELL — The results are in for the 2018 annual report which provides a summary of financial data from 77 farms enrolled in the S.D. Farm/Ranch Management program.
Overall, the average operation saw cash expenses reach $842,789 which is up $199,822 from the prior year. The cash farm income of $933,184 is an increase of $172,930. This produced a net cash income of $90,395. After depreciation and accrual adjustments, $77,062 was the average net farm income.
In 2018, crop production expenses totaled $212,978 with the bulk of those dollars spent on seed, fertilizer, chemical, and crop insurance. The cost of those four direct inputs alone totaled $220/acre for corn, down $11.62/acre from 2017. The average cost for the same direct expenses was $136/acre for soybeans, up $6/acre from the prior year. Many farmers now rely on a variety of outside consultants and this supports several people who are employed by local farm cooperatives and other private agricultural companies. With the tight margins of commodities, managing inputs and enhancing marketing strategies is all the more necessary.
For most farms enrolled in our program, livestock production is a top source of revenue and it therefore represents a large area of expenses with $173,566 of direct costs on average, up $3,224 from last year. Most of these dollars are spent on feeder livestock, feed purchases, animal health products and services. It should be noted that this activity is a real economic engine for our area as most of the feed is produced and processed in South Dakota.
The other large expense is farmland rent in an ever-competitive land market. The average producer paid $133,625 in cash rent during 2018. Other important industries that farmers support include implement dealers, farm supply businesses, and local repair shops. The average farm spent $58,167 in repairing equipment last year increasing $11,269 from a year ago. Another critical area for many farmers is keeping reliable employees on the payroll and hiring custom operators to assist with planting, spraying, harvesting, spreading manure, etc. According to our data, the average farm operation spent $56,628 for those services last year up from $29,987 in 2017.
In addition to spending $842,789 in operating costs, farmers increased their net worth by 2.6% starting with an average of $2,019,804 at the beginning of the year and ending at $2,073,784 showing an increase of $53,980, which is encouraging given the past several years. Family living expenses came in just $942 higher than last year at $64,351 this shows families have been able to adjust their spending to keep the total household expenditures basically steady.
Overall, the average farm in the program had its best year of the last five in regard to net farm income. Analysts are seeing a cautious optimism in the ag economy throughout the entire state. However, extra costs or losses with the severe weather in early 2019 and with what appears to be a delayed planting season have many concerned.
The S.D. Center for Farm/Ranch Management program is offered through Mitchell Technical Institute and is available to all producers who are seeking a detailed analysis on their farm financial performance. For more information about the data in this article or about the programs offered, call 1-605-995-7191 or send an email to firstname.lastname@example.org.