MITCHELL — The results are in for the 2019 annual report which provides a summary of financial data from 78 farms enrolled in the South Dakota Farm/Ranch Management program.
Overall, the average operation saw cash expenses of $801,846 which is down $40,943 from the prior year. Cash farm income of $942,451 showed an increase of $9,267 which resulted in a median net farm income of $40,415. Even with higher cash income and lower cash expenses, the median net farm income was $13,473 lower than 2019. This is a direct result of the many prevent plant acres which caused a corresponding lower value of ending inventories on many South Dakota farms. In the FINPACK analysis, net farm income is represented by cash activity, gain or loss in inventories and standard depreciation for the year.
For most farms enrolled in our program, livestock production ranks as a top source of revenue and it therefore represents a large area of expenses with about $195,683 direct costs up $22,117 from last year on average. Most of these dollars are spent purchasing feeder livestock, buying feed and animal health products. 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.
In 2019, crop production expenses totaled $163,261 dropping off $49,717 from the previous year. Prevent plant acres in many South Dakota counties is the main factor in this reduction. The bulk of those dollars are spent on seed, fertilizer, chemical, and crop insurance. Even though crop prices remain relatively low, the cost of production has remained constant from the 2018 crop year with those four direct inputs totaling $219/acre for corn. The same direct inputs on soybeans cost $130/acre on average. 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, the cutting of expense along with price supports has been vital to making profits.
Another large expense is farmland rent. Land values are still strong and thus rental rates remain substantial with the average producer paying close to $148,067 in cash rents during 2019 an increase of $14,442 from the year before. Another important industry that farmers support is implement dealers, farm supply businesses, and local repair shops. The average farm spent $53,561 in repairing equipment last year decreasing $4,606 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, harvesting, spreading manure, etc. According to our data, the average farm operation spent $55,647 for those services last year down from $56,628 last year. In our program we do see a turnover of different farms making up our data for these reports each year but in these areas we have remained fairly constant over the 2018 and 2019 crop years.
In addition to spending $801,846 in operating costs, farmers increased their net worth by 3% starting on average at $1,862,329 at the beginning of the year and ending at $1,927,488 at the end showing an increase of $65,159 which is showing a second year with only a 3% growth in net-worth on the average farm in South Dakota. Cash family living expenses came in $1,715 lower than last year at $62,636, showing families have been able to adjust their spending habits keeping the household spending at a minimum.
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. Contact www.sdcfrm.com or the Center at (605) 995-7193 for more information.