Explanatory Notes for Crops Tables North Dakota Farm Business Management Education Program |
| The "Crop Enterprise Analysis" tables show the average physical
production, gross return, direct costs, overhead costs, and net returns per acre. All
costs are actual costs; no opportunity costs are included. The "Net Return per
Acre" is the "Gross Return per Acre" minus the direct and overhead costs.
"Net Return" represents the return to the operator's and family's unpaid labor,
management, and equity. It represents the return to all of the resources, which are owned
by the farm family and hence, not purchased or paid a wage. The last section of each crop
table contains economic efficiency measures, which provide useful standards or goals for
the individual managers. There are potentially three tables for each crop depending on the farmer's tenure on the land. The crop tables may be for (1) owned land, (2) cash rented land, and (3) share rented land. Individual farms may have data in all three tables if all three land tenure categories are represented in that farm business. When there are less than five farms with a particular crop and tenure, that table is not included in the report. Farms are classified into low 20% or high 20% on the basis of net return per acre. The classification is done separately for each table, i.e., an individual farm may be in the low 20% for one crop, the high 20% for a second, and the middle 60% for a third. When there are less than 25 total farms with any particular crop and farmer's tenure, only overall averages are presented. Value per unit is the market price received plus any loan deficiency payment. Miscellaneous income includes crop insurance and disaster payments for crops. Several costs items, such as "utilities," "hired labor," and "interest paid," are listed under both "direct" and "overhead" costs because some of these costs are specific to that crop whereas others are general overhead costs of the farm. For example, "Direct Lease Payments" refers to non-land inputs or resources leased and used only in that crop enterprise and not listed elsewhere under direct costs; the most common example is the lease of equipment that is crop specific. However, cost of leasing machinery that is used for the entire farm operation is listed as an overhead cost. Interest payments are likewise divided into those incurred directly for a specific crop and those that are not. "Land Rent" is listed as a separate category and is assigned as a direct cost for each crop enterprise because it is identifiable with a specific crop. In the case of double cropping, one-half of the rent is charged to each crop. The last section of the crop tables include several cost of production calculations. "Total direct expense per unit" and "total direct and overhead expense per unit" are calculated by dividing "total direct expense per acre" and "total direct and overhead expense per acre," respectively by "yield per acre." With "labor and management" being the breakeven price after direct, overhead and a labor and management charge are considered. "Total expense less government and other income" is a breakeven price after all costs (including labor and management charge) are reduced by government payment and miscellaneous income. Rounding of individual items for the report have caused minor discrepancies with the calculated totals. |