The “2018 Iowa Farm Costs and Returns” analysis is now available, and despite a slight increase in net farm income last year, farmers saw another year of tight margins and a decrease in total farm assets and net farm worth.
The average accrual net farm income (adjusted for inventory changes and accrued expenses) increased by 6% in 2018, to $58,832.
“It wasn’t a huge increase in income, but at least we didn’t see a decline,” said Alejandro Plastina, assistant professor and extension economist at Iowa State University. “However, the rate of return on assets remains very low, compared to historical averages.”
The average value of total farm assets declined by $147,471 (6%), and the average value of farm net worth declined by $121,876 (7%), according to the report, which is available in the September edition of Ag Decision Maker, a monthly newsletter of Iowa State University Extension and Outreach.
About 600 farmers provided income and expense data for this year’s report, which is organized through a collaboration of ISU Extension and Outreach and the Iowa Farm Business Association.
Kent Vickre, state coordinator with the Iowa Farm Business Association, said the data definitely reflects farmers’ struggles with profitability.
“I think there are only so many years farmers can kind of borrow from their net worth,” Vickre said.
The average debt to asset ratio remained stable in 2018, at 24%, but is also the highest level since 2009. The average current asset-to-debt ratio increased for the first time since 2012, to 3.14 in 2018, but is still below the 10-year average of 4.21.
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In addition to yearly comparisons, the report also compares farms based on total value of gross sales, and by their degree of profitability. The report was limited to farms with sales of $100,000 or more.
Surprisingly, perhaps, is the decline in farm size, with the average farm size declining by 21 acres – the lowest since 2013, to an average farm size of 668 acres.
Vickre said he’s not sure why farms may have decreased in acreage, unless some operators gave up some ground deemed unprofitable. He said it’s also possible some operators were frustrated and did not report their full acreage farmed.
Because the data is delayed by one year, the report does not contain 2019 information. The current year saw severe flooding and planting delays that could delay harvest and reduce yields.
Vickre said crop conditions vary widely across the state in 2019, depending on location, and if and when a crop was planted.
Financial assistance will also play into the profitability of 2019, according to Plastina. Various forms of disaster assistance have already been made available, and farmers are compensating part of their trade war losses with the Market Facilitation Program.