Minnesota Farm Income Hits Historic Low

After adjusting for inflation, Minnesota farms earned the lowest median farm income in the past 23 years of data tracked by University of Minnesota Extension and Agricultural Centers of Excellence within Minnesota State.  

In 2018, the reported median net income was $26,055, down 8 percent from the previous year. Farmers in the lowest 20 percent reported losing nearly $72,000. The analysis examined data from 2,209 participants in farm business management programs, as well as 101 members of the Southwest Minnesota Farm Business Management Association.  This is a collaborative project with the FINPACK Team and the Center for Farm Financial Management (CFFM).

[Read more…]

Spreadsheets vs. Software

Spreadsheets vs Software in Credit AnalysisAre you still using spreadsheets to complete the annual credit analysis on your customers?  Do your spreadsheets provide you the best information on a customer’s financial position?  Have your spreadsheets left you with questions related to your bank’s true risk?  If so, FINPACK Credit Analysis Solutions software is the tool you’ve been looking for! [Read more…]

Farm Incomes Take Another Dip in 2017

Farm Income Takes a Dip in 2017

Minnesota farmers experienced their fifth consecutive year of low profitability in 2017. The median farm earned $28,551, down slightly from just over $36,000 in 2016.  Declines in farm income were largely driven by low profits and losses for cash crop farms, while livestock farms, in general, had a better year.  With average investment of over $2 million, farms earned a 2.2% return on investment. Across all farm types, almost one-third of farms lost net worth in 2017.

Those are among key findings in the annual farm income analysis conducted by University of Minnesota Extension and Minnesota State in collaboration with the FINPACK Team and the Center for Farm Financial Management (CFFM). The analysis used data from 2,164 participants in the Minnesota State Farm Business Management programs and 104 members of the Southwest Minnesota Farm Business Management Association. Participating producers represent approximately 10 percent of commercial farmers in Minnesota.  CFFM’s work with projects like this provide the benchmarking metrics used in FINPACK.  The full FINBIN report on MN Farm Finances can be accessed here[Read more…]

The Value of a Cost Balance Sheet

Cost balance sheets value assets at purchase price less accumulated depreciation.  This accumulated depreciation can be done using tax or management depreciation methods. Management depreciation differs from tax depreciation by using the economic or useful life of the asset for depreciation calculations.

Using cost balance sheets allow lenders to better monitor the financial performance of the business over time.  With cost balance sheets, net worth growth comes from business retained earnings.  Cost value balance sheets do not have market valuation changes affecting the net worth of the business.  Hence true business performance is measured by the cost balance sheet.

[Read more…]