TEPAP 2012 Financials

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The 22nd year of the Executive Program for Agricultural Producers (TEPAP) was a record-setter for attendance. Under the leadership of Dr. Danny Klinefelter of Texas A&M University, spaces at Barton Creek Resort were sold out by October for the first and second year groups. Producers traveled from 26 states, Canada, Europe and Australia to participate in these two classes of intense agricultural executive education.

Many producers completed management and financial evaluations of their business, which was enumerated by Dick Wittman, an outstanding agricultural, farm and ranch consultant. This year's group was the youngest by far, with many in the age range of 30-45, which may have altered the financials and management practices when compared to previous years’ summaries.

The median gross farm revenue was $2.3 million. The median debt-to-asset ratio was 32%. This is representative of the national average for commercial farm businesses, but is much higher than the national average for all farms and ranches, which is 10% debt-to-asset ratio.

The median and average rate of return on assets was 9.3% and 11.3%, respectively. Compared to the FINBIN data, this return was approximately 5% less than the top 20% of producers represented in their database. The median operating profit margin was 22%, with a median asset turnover ratio of 41%. Examining these ratios finds businesses are efficient in the use of capital assets and are experiencing very favorable margins, despite a mix of crop, livestock and horticulture businesses within the group.

This group of lifelong learners may not have the largest operations, but they appear to be profitable and efficient, with a focus on margins and reasonable debt levels, which is a formula for success in today’s volatile markets.

Next week we will focus on this group’s management practices.

 

Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at sullylab@vt.edu.

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