SD farm income shows increase in 2018
MITCHELL, S.D.—South Dakota farms and ranches in 2018 experienced a rise in net farm income from 2017, according to data compiled by the South Dakota Center for Farm/Ranch Management program at Mitchell Technical Institute.
The median net farm income of farms enrolled in the program in 2018 was $53,888, compared to $26,209 in 2017. The data is compiled through a statewide educational program that assists producers with their recordkeeping and management.
The net farm income in 2018 is the highest since 2014, when the median net farm income was $115,564. The farms in the 2018 report are certainly not all the same that were represented in 2014, but the data indicates that the farms with a very low or negative net farm income in recent years may be trending upward.
Farms and ranches are continuing on the right track to controlling costs and enhancing income from what resources are available. This information is based on averages and, as always, there are farms and ranches with higher and lower returns.
2018's average farm gross cash income of $933,184 less $842,789 average cash expense, equals a net cash farm income of $90,395. That is a drop from $117,287 in 2017. (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 program farms in 2018 had inventory changes amounting to an increase of $55,396 contrary to the 2017 average of just $5,693 in inventory changes. This is what propelled the net farm income rise. Net farm income is the number used to measure a farm or ranch's true profitability by including accrual adjustments.
"When looking at the inventory changes, the crop and feed inventory value provided the 'push' upward. In the group summary, corn, soybeans, and alfalfa all yielded more than in 2017," Mitchell Technical Institute instructor Will Walter said.
The average age of participating operators was 44.5 years old, with an average of 20.3 years farming experience. Cash family living expenses for a family size of 3.7 members on average was $64,351. In 2017, that average was $63,409. Farm families in the program showed an average of $36,065 in non-farm income, up from $30,845 in 2017.