2012 Year in Review
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Transcript of 2012 Year in Review
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2012 Year in ReviewPrepared by: Eric J. DetersRiverland Farm Business
Management Director/Instructor
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In 2012, on average, each farmer…
• Owned 241 acres (+5)• Raised crops on 642 acres (+25)• Had assets totaling $2,999,653 (+405,504)• Managed debt of $1,209,663 (-154,801)• Had a net worth of $1,789,990 (+250,704)• Net farm income of $260,813 (+48,332)• Median Net Farm Income of $176,593
(+38,748)• Added $32,698 of non farm income (+5,881)
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Cash Expenses to Cash Income
1995 2000 2005 2007 2008 2009 2010 2011 2012$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Expense Income
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Net Farm Income
93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 09 10 11 12-$200
-$100
$0
$100
$200
$300
$400
$500
$600
Average High Low
NET FARM INCOME – is total cash income minus total cash expenses and depreciation +/- any change in inventory
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What is the source of Net Farm Income?
2008 2009 2010 2011 2012
Cash Farm Income
791,359 716,951 769,397 950,144 990,673
Cash Farm Expenses
660,606 633,306 661,155 778,872 791,396
Net Cash Income 130,753 83,645 108,243 171,272 199,278
Inventory Change 23,741 -20,857 116,024 85,881 111,930
Deprecation -36,378 -42,664 -46,347 -46,002 -52,564
Capital Sales 277 1042 1063 1330 2170
Net Farm Income 118,393 21,165 178,983 212,481 260,813
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Net Farm Income by Type of Farm (70% sales)
Crop Dairy Hog Crop & Beef Other-$600
-$400
-$200
$0
$200
$400
$600
$800
2008 2009 2010 2011 2012
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Rate of Return on Farm Assets (ROA)
Average Low 20 % 40-60% High 20%02468
1012141618
12.9
3
11.3
16.7
Rate of return cost
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1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
232948 247314
253812252345 272483
312178 321714
354967
443843
509575 526536554421
579192
626460 645034
741611773417
811024
773361
858988
Average Farm Total Debt at Cost
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Balance Sheet AnalysisMoney Borrowed -Vs- Debt Repaid
19992000
20012002
20032004
20052006
20072008
20092010
20112012
100000
150000
200000
250000
300000
350000
400000
450000
500000
Borrowed Repaid
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Percent in DebtMarket Basis
93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 09 10 11 1238
40
42
44
46
48
50
52
54
56
45
46
43
40
44
52
50 5051
5453
51
49
48
43
45 45
47
43
40
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Total Family Uses of Cash, 2012
51 S.E. Minnesota Farm Families
ITEM
Cash Living Expenses $55,119
Income Taxes 17,880
Other Capital Purchases 2,313
Personal Share New Auto 3,283
Savings & Investments 8,384
Total Family Uses of Cash $86,723
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Farm Family SpendingWhere Did the $1,162,859 Go in 2012?
38413; 3%
86723; 8%51907; 5%
478334%
519845; 47%
12425; 1%
227162; 21%
113197; 10%
7776; 1%
Chart Title
Interest
Family Living
Hired Labor
Other Farmers
Agribusiness
Utilities
Capital Purchases
Rent/Lease
Real Estate Taxes
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What does my
banker want to
know?
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Current Ratio (Liquidity)Current farm assets / current farm liabilities
2004 2005 2006 2007 2008 2009 2010 2011 20120
0.5
1
1.5
2
2.5
3
3.5
0.93
1.241.06 1.11
1.26 1.181.3
1.96
1.511.49
1.65 1.63
1.92 1.95
1.57
2
2.32
2.57
1.86 1.92
2.2
2.892.79
2.162.29
2.58
3.13
Low 20% Average High 20%
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Working Capital (Liquidity)Current farm assets minus current farm liabilities
'04 '05 '06 '07 '08 09 10 11 12-200000
0
200000
400000
600000
800000
1000000
1200000
Low 20% Average High 20%
•Green 50% of CashOperating exp.
•Yellow 20 to50 % of CashOperating exp.
•Red <20 % of CashOperating exp.
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Debt to Asset Ratio (Solvency)Total farm liabilities / total farm assets
'04 '05 '06 '07 '08 09 10 11 1220
25
30
35
40
45
50
55
60
65
70
Low Average High
•Green <30 % Debt
Yellow 30 to 70 % Debt
•Red >70 % in Debt
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Term Debt Coverage Ratio
'04 '05 '06 '07 '08 09 10 11 12
-200%
-100%
0%
100%
200%
300%
400%
500%
Average Low 20% High 20%
>150 % Green
110 to 150 yellow
<110 % Red
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'01 '02 '03 '04 '05 '06 '07 '08 09 10 11 120%
10%20%30%40%50%60%70%80%90%
100%
75.7 75.6 77.6 74.5 72.4 74.9 70.7 74.985.8
69 71.1 67.7
7.1 7.8 6.2 4.6 5.1 4.64.4
4.5
6
5.4 4.5 4.8
7.3 6.9 6.35 5.1 5.7
5.25.1
5.5
4.9 3.6 3.6
9.9 9.7 9.815.9 17.4 14.8 19.6 14.9
2.7
20.8 20.9 24
Net Income Interest Depreciation Opr Expense
Financial Efficiency – 2001 to 2010How was the Gross Revenue split in the Average Business?
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2012 Crop Review
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Corn Yields Per Acre(Rented Acres)
2008 2009 2010 2011 2012150
160
170
180
190
200
210
172.8
185.5
191.3
179.4 179.9
176.9
194.4
201.4
182.7
199.5
194.8 194.3
204.9
191.8 192.5
Average High Rented High Owned
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Total Direct & Overhead Cost per Bushel of Corn(Rented Acres)
2008 2009 2010 2011 20120
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
3.533.72
3.39
4.19
4.76
3.14 3.052.92
3.61
4.03
2.58 2.592.48
2.9
3.76
Average High Rented High Owned
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The Average Price of Corn SoldCash sales during the year
2004 2005 2006 2007 2008 2009 2010 2011 20121.5
22.5
33.5
44.5
55.5
66.5
2.401.96 2.04
2.93
4.163.90 3.74
5.22
6.13
Dollars per Bushel
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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-80
-30
20
70
120
170
220
270
320
370
-6.81 -11.44-48.7
54.5934.84 37.56
56.22
155.37
234.03
95.6
-23.74
210.47
254.05
331.07
CornReturn Per Acre
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Soybeans Yields Per Acre(Rented Acres)
2008 2009 2010 2011 20120
10
20
30
40
50
60
70
44.546.3
52.2
47
52
46.549.7
55.553.7
58
48.3
52.655.4
53
57.8
Average High Rented High Owned
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Total Direct & Overhead Cost per Bushel of Soybeans(Rented Acres)
2008 2009 2010 2011 20120
2
4
6
8
10
12
8.878.43
7.69
9.6510.33
8.23
6.77 6.587.16
8.26
6.34
5.044.56
4.76
6.68
Average High Rented High Owned
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The Average Price of Soybeans SoldCash sales during the year
2004 2005 2006 2007 2008 2009 2010 2011 20121.5
3.5
5.5
7.5
9.5
11.5
13.5
15.5
6.655.74 5.46
7.12
10.379.85 9.72
11.52
13.31
Dollars per Bushel
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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
50
100
150
200
250
33.27
66.90
15.04
74.23
37.83 39.30
91.88 84.59
249.38
99.59
8.54
157.09
99.89
203.71
SoybeanReturn Per Acre
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2012 Dairy Returns
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Average Milk Production per CowBased on Net Return per unit
2008 2009 2010 2011 20120
5000
10000
15000
20000
25000
30000
21321 2115322310
2307224967
17557
2064720208 20237
24439
23087
2121022776
24216 23939
Average Low High
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Cost per Cwt. of Milk with Other Revenue and Labor & Management(Combined Dairy)
2008 2009 2010 2011 20120
5
10
15
20
25
18.45
15.8 16.16
18.4118.44
16.64
14.7513.78
17.16 17.57
22.1
17.7318.9
20.1819.5
Average High Low
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The Average Price of Milk Sold
2004 2005 2006 2007 2008 2009 2010 2011 20121.53.55.57.59.5
11.513.515.517.519.521.5
16.4115.72
13.40
18.6219.52
13.29
16.02
19.9619.28
16.71
15.92
13.89
19.1619.72
15.14
16.29
20.0619.61
Average Linear (Average) High
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Have a Great Year in 2013!