The average farm in South Dakota experienced nearly an 18% increase in net farm profit in 2014 according to data compiled by farms participating with the South Dakota Center for Farm/Ranch Management. The average farm income in 2014 was $168,361 compared to the 2013 average of $141,973. The data was compiled through the statewide program that assists producers with their recordkeeping and management offered through Mitchell Technical Institute.
Though this is an increase from 2013, the amount is still below the prior five-year average net income of $197,556. “This increase is somewhat misleading as it was primarily a result of high profits from large livestock producers in 2014. Grain farming was profitable for the most part, but nowhere near the record levels of the past few years as input costs have remained steady or slightly increased while grain prices have remained low,” says Jared Hofer, Director of Farm Management Program at Mitchell Technical Institute. Average gross cash farm income of $1,065,109 was nearly identical to the prior year amount of $1,061,552. Similar to last year’s 2% increase, total operating expenses showed a 1.8% increase to $930,386 resulting in Net Cash Farm Income of $134,723 compared to $157,809 in 2013. Net cash farm income does not factor in changes in inventory, depreciation, or capital sales and purchases, rather it is simply the cash farm income less cash farm expenses.
The average age of participating operators was 44.1 years old with an average of 20.8 years farming experience. Total cash family living expense, including investments, for the family averaging 3.7 members was $84,719 in 2014, which was a decrease from $87,246 in 2013. The farm families showed $28,036 in non-farm income, up from $19,512 the prior year.
Balance sheets again showed improvement with the average increase in net worth or owner’s equity of $216,521 or 9%. Liquidity measures such as working capital and current ratio both showed minor changes from 2013, both remain strong at $417,964 and 1.94 per operation, compared to $400,977 and 1.96 in the prior year. Working capital to gross income increased slightly from 36.7% in 2013 to 36.9% in 2014. Other numbers of note from 2014 data include average farm assets of $2,837,554 and equity of $2,204,665 resulting in a rate of return on assets of 7.4% and return on equity of 8.7%. Repayment margin remains adequate with $133,716 and a strong debt service coverage ratio of 3.04 and replacement margin ratio of 2.27.
More information on the 2014 South Dakota Annual Report will be released soon on the South Dakota Center for Farm/Ranch Management’s website at www.sdcfrm.com or by contacting the Center at 605-995-7196 or [email protected].