Recently my travels included a stop to address the FINPACK Lenders Conference in Mankato, MN. Bob Craven, director of the Center for Farm Financial Management, presented summary data from the FINBIN financial database.
The average net farm income of producers in 2008 was $139,466, down from $156,012 in 2007. Referring back to the 1996-2002 era finds average net farm income ranged from $26,823 to $59,721. Comparing this time period to the past two years, one can see that net farm incomes have approximately tripled.
The biggest surprise is the widening gap in the net farm income from the top 20% to the low 20% of producers in the database. The average net farm income was $426,476 for the top 20%, compared to -$33,206 for the low 20%. When analyzing the data since 2003, the financial extremes have become greater each year.
Breaking the numbers down by enterprise, crop farmers’ average net income was over $180,000 for 2008, more than four times higher than the 1996-2003 period. Producers who have beef and crop enterprises and those who have just beef farms had the most consistent income pattern. However, the lowest net incomes, generally below $50,000, were for hog and dairy farms. Crop and hog farms demonstrated the most variability in net farm income from 1996-2008, particularly later in the period.
Granted, the producers participating in the FINBIN database are above average; however, this data provides a benchmark to size up economic performance.
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 email@example.com.