The average farm saw a 6.3% increase in net farm profit from 2008 to 2009 according to financial information provided by farmers enrolled in South Dakota s Farm/Ranch Business Management Program. The Farm/Ranch Business Management Program is offered to farmers and ranchers in South Dakota through Mitchell Technical Institute. The purpose of the program is to assist farm and ranch operators in upgrading their management skills.
Average net farm profit of enrolled farmers was $112,390 in 2008 and increased to $119,570 in 2009. Net farm profit represents dollars earned from the farm before business expansion, loan principal payments and family living expenses are paid, says Roger DeRouchey, Farm Management Instructor at Mitchell Technical Institute. The average enrolled family farm spent $46,306 for living but also earned $32,968 from non-farm sources. Non-farm income is essential for covering family expenses in today s farming with tight profit margins, says DeRouchey.
The 20% most profitable farms did considerably better, with net farm profit of $285,159 whereas the 20% least profitable farms net farm loss was $18,297. The spread in income is often greatly affected by difference in management practices and climatic conditions.
Average progress was made towards increasing net worth or owner s equity. A change in equity of $90,525 was realized by the average farm, a 7.7% increase in 2009. In 2008 the change in equity was an increase of $58,502 or 5.2%. Gains can occur as a result of investing farm income into capital assets or repaying debt. Further evidence of the range in profitability can be seen in equity change between high and low profit farms. High profit farms experienced a $42,567 increase in equity while low profit farms showed a decrease of $17,390.