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Published April 06, 2010, 07:58 AM

MTI: Net farm profit up 6.3%

The average farm saw a 6.3 percent 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 at Mitchell. The purpose of the program is to assist farm and ranch operators in upgrading their management skills.

The average farm saw a 6.3 percent 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 at Mitchell. 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,” said Roger DeRouchey, farm management instructor at MTI, in a news release.

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,” DeRouchey said.

The top 20 percent of most profitable farms did considerably better than other farms, with net farm profit of $285,159. The bottom 20 percent of least profitable farms experienced a net farm loss of $18,297. The spread in income is often greatly affected by difference in management practices and climatic conditions, the MTI news release said.

Average progress was made toward increasing net worth or owner’s equity, according to the MTI news release.

A change in equity of $90,525 was realized by the average farm, which equated to a 7.7 percent increase in 2009. In 2008, the change in equity was an increase of $58,502, or 5.2 percent.

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 lowprofit farms showed a decrease of $17,390.

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