2012 Year in ReviewPrepared by: Eric J. DetersRiverland Farm Business

Management Director/Instructor

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)

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

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

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

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

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

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

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

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

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

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

What does my

banker want to

know?

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%

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.

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

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

'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?

2012 Crop Review

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

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

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

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

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

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

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

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

2012 Dairy Returns

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

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

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

Have a Great Year in 2013!