PR - PROFITABILITY MIGRATION IN MINNESOTA FARMS

Abstract:
Producers who benchmark are seeking growth and improvement for their farms, but how can they achieve it? What are the top producers doing differently, and are they doing it consistently? Can information be gleaned from financial statement data to help producers narrow their focus and make their farm businesses stronger? This paper uses data from the FINBIN farm financial database to analyze how often a farm migrates between profitability efficiency groups to establish a set of consistently top farms. Consistently top farms are found to be much more efficient in overhead expenses such as fuel, repairs, and interest payments. Top farms had less debt and had more working capital as a percentage of gross revenue.
Keywords: profitability, efficiency, migration, net farm income