Transcript Top 20 Project: Producer Tendencies Affecting Net Farm Income

Top 20 Project:
Producer Tendencies Affecting
Net Farm Income
Preliminary Findings
RME Conference
Reno, NV.
March-April 2009
Copyright 2009. University of Minnesota. All Rights Reserved.
Top 20 Project
•Rationale for research:
– Since 2003, SWMFBMA farmers in the high 20
percent net farm income category, have
increased net farm income faster than other
SWMFBMA farmers.
– Want to explore what tendencies might
contribute to this difference in net farm income
increase.
Copyright 2009. University of Minnesota. All Rights Reserved.
Farm Financial Data - SWMFBMA
Copyright 2009. University of Minnesota. All Rights Reserved.
Top 20 Project
• Research approach:
– Utilized mail-out survey
– Total surveys sent = 110
– Completed surveys = 79
– Surveys with financial data = 67
– After removal of statistical outliers = 55
– Survey results correlated against 5 years of
SWMFBMA financial data.
Copyright 2009. University of Minnesota. All Rights Reserved.
Top 20 Project
•Sorted survey data by operation’s net
farm income.
•Sorted into three net farm income
categories:
• ≥ $50k to < $100k - 19 farms
• ≥ $100k to < $150k - 20 farms
• ≥ $150k to < $300k - 16 farms
Copyright 2009. University of Minnesota. All Rights Reserved.
Financial Characteristics
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Operating Expense Ratio
61.50
61.00
60.50
60.00
59.50
59.00
58.50
58.00
57.50
57.00
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
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Depreciation Expense Ratio
6.00
5.80
5.60
5.40
5.20
5.00
4.80
4.60
4.40
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
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Interest Expense Ratio
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
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Total Farm Assets - Market
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
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Return on Assets - Cost
16.00
15.50
15.00
14.50
14.00
13.50
13.00
12.50
12.00
11.50
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
Copyright 2009. University of Minnesota. All Rights Reserved.
Percent Debt - Cost
60.00
50.00
40.00
30.00
20.00
10.00
0.00
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
Copyright 2009. University of Minnesota. All Rights Reserved.
Percent Debt - Market
60.00
50.00
40.00
30.00
20.00
10.00
0.00
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
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Management Issues
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Adapted Precision Farming Technology
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
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Rent Percentage
76.00
74.00
72.00
70.00
68.00
66.00
64.00
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
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Time Spent on Farm Record Keeping
1.40
1.35
1.30
1.25
1.20
1.15
≥ $50k to < $100k
≥ $100k to < $150k
None = 0
Series1
≥ $150k to < $300k
Some = 1
Much = 2
Copyright 2009. University of Minnesota. All Rights Reserved.
Importance of Productivity Measures
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
≥ $50k to < $100k
≥ $100k to < $150k
Strongly Disagree = 1
Series1
≥ $150k to < $300k
Strongly Agree = 5
Copyright 2009. University of Minnesota. All Rights Reserved.
Importance of RankEm (Benchmark)
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
≥ $50k to < $100k
≥ $100k to < $150k
Not at all
Valuable= 1
Series1
≥ $150k to < $300k
Extremely Valuable = 4
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Importance of Cash Flow Projections
3.00
2.90
2.80
2.70
2.60
2.50
2.40
2.30
2.20
≥ $50k to < $100k
≥ $100k to < $150k
Not at all
Valuable= 1
Series1
≥ $150k to < $300k
Extremely Valuable = 4
Copyright 2009. University of Minnesota. All Rights Reserved.
Importance of Meetings & Training
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
Not at all Valuable= 1 Extremely Valuable = 4
Series1
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Attitudinal Perspectives
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Welcome Most Changes to Agriculture
3.80
3.70
3.60
3.50
3.40
3.30
3.20
3.10
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
Strongly Disagree= 1 Strongly Agree = 5
Series1
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Control of My Own Destiny
4.10
4.00
3.90
3.80
3.70
3.60
3.50
3.40
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
Strongly Disagree= 1 Strongly Agree = 5
Series1
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Farm Business Characteristics
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Parents Financial Help When Started
Farming
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
≥ $50k to < $100k
≥ $100k to < $150k
None = 0
Series1
≥ $150k to < $300k
Some = 1
Much = 2
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Number of Generations Farming
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
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Family Members Interested in Operating Your Farm
Yes
14.5%
16.1%
9.7%
No
12.9%
14.5%
12.9%
≥ $50k to < $100k
≥$100k to < $150k
≥$150k to < $300k
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Education & Information
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Highest Level of Education (primary)
3.80
3.70
3.60
3.50
3.40
3.30
3.20
3.10
3.00
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
Less than high school
Series1= 1 to Post college, graduate = 6
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Highest Level of Education (spouse)
5.00
4.00
3.00
2.00
1.00
0.00
≥ $50k to < $100k
≥ $100k to < $150k
≥ $150k to < $300k
Less than high Series1
school = 1 to Post college, graduate = 6
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Information Sources
• Select from list of six, then pick 1st and 2nd best
information source:
–
–
–
–
Newspapers, magazines, radio/TV, direct mail.
Group discussions/advice: workshops, tours, etc.
Individual discussion with advisor or consultant.
Discussions with people in my personal network such
as friends, colleagues, etc.
– Books, reports, etc.
– Electronic media (Internet, websites, etc.)
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Information Sources
• 1st choice for best information source:
#1: Individual discussion with consultant or advisor - 45%
#2: Newspapers, magazines, radio/TV, direct mail - 26%
#3: Discussion with people in my personal network - 18%
Copyright 2009. University of Minnesota. All Rights Reserved.
Information Sources
• 2nd choice for best information source:
#1: Electronic media - 50%
#2: Discussion with people in my personal network - 30%
#3: Individual discussions with consultant or advisor - 18%
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Key Points
► Utilizing & managing assets as efficiently as
possible is important.
► Managing debt & expenses is key.
► Utilizing technology, if it improves efficiency, is
important.
► Paying attention to records & analysis data
and managing accordingly is important.
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Key Points
► Seeking out new information & practices that
apply and implementing them when
possible is important.
► Growing the business when possible is helpful.
► Working at adapting to change and keeping a
positive attitude is very beneficial!
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Contact Information
Gary A. Hachfeld
Extension Educator
Ag Business Management
Extension Regional Office
Mankato, MN.
Phone: 507-389-6722
Email: [email protected]
Copyright 2009. University of Minnesota. All Rights Reserved.
Comments ?
Questions ?
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