Income for Kansas farmers in 2009 was above average through much of the state for the third year in a row.
In its annual summary, the Kansas Farm Management Association reported that average net farm income for 1,477 farms was $104,781. That figure was down from $124,617 in 2008 and $115,312 in 2007, but well above the five-year average of $89,554. The summary is available on the Web: http://www.agmanager.info/kfma and click on Executive Summary.
The Kansas Farm Management Association is based at Kansas State University.
"We had a third good year in a row," said KFMA administrator Kevin Herbel, who noted that farms growing irrigated crops, particularly, fared better than some other operations.
KFMA reports net income on an accrual basis - adjusted for any inventory changes between the beginning and end of the year. They represent the return on the farmer´s labor, management and investment in the operation.
Herbel acknowledged that while the data reflect agriculture statewide, it is not a definitive picture of all Kansas farming operations. About 19 percent of the KFMA-member farms had a net loss last year. About 42 percent had greater net farm income compared with the previous year.
Herbel noted that the type of operation, where it is located, management decisions and other factors all play a role in the bottom line every year.
"One thing that three years of above-average net income has made a difference in is liquidity," said Michael Langemeier, agricultural economist with K-State Research and Extension. "Liquidity dramatically increased from 2006 to 2009. In fact the 2006 ratio was2.3 and the 2009 ratio was 3.2."
Langemeier explained that liquidity refers to current assets divided by current liability.
"It´s obvious that farmers have taken the opportunity to invest in machinery over the last three years," he said. In 2008 we were looking at crop machinery investment in the state of $152 per crop acre compared with 2009 at $172 per acre. That´s a very large increase, the result of three good years in a row."
As in every year, farms in some parts of the state posted higher income than others, Herbel said. Operations in southwest Kansas posted the only gain from the previous year, at $84,462 compared with$82,605 in 2008. Net farm income in northwest Kansas averaged $117,311, down from $144,839 in 2008, while net farm income in north central Kansas averaged $88,274 versus $104,516 a year earlier.
Net farm income in south central Kansas for 2009 averaged $85,983 – a 35 percent drop from $132,575 a year earlier and northeast Kansas net income dipped to $117,854 from $121,891 in 2008. Net farm income in the southeast part of the state averaged $119,381 compared with $133,820 in 2008.
"In 2008 we had both high yields and high commodity prices," Herbel said. "That led to a very high value of crop production per acre in 2008. In 2009, we actually had yields that were higher in pretty well all of the crops from what they were in 2008, but we had commodity prices that were lower - in some cases substantially lower than in 2008."
Some of the high yields and high prices were offset by high production costs in 2008, he said, noting that production costs stayed similar in 2009.
Total expenses in 2009 were similar to those in 2008, although individual expenses were different, Langemeier said.
Total seed expenses jumped 27 percent in 2009, which may be partially explained by farmers switching to different crops in some instances, the economists said. At the same time, fertilizer and fuel expenses were down in 2009, compared with 2008.
The size of KFMA-member farms grew 2 percent in 2009, compared with the previous year, with close to half of the farms reporting an increase in either owned or rented acres.
"Profit margin for 2009 was 16 percent, down from 2008 and 2007 when profit margins were more than 20 percent," Langemeier said. "But looking at the long-term average, 16 percent is not bad at all. Long- term is probably close to 12 percent."
"It´s important for each farm operator to know where they´re at financially, and that they use their numbers to make sound management decisions," Herbel said. "Keeping records is most valuable if you´re using them to make better decisions."