by Morgan Steele Stutrud

The 2023 farm season is in the rearview mirror for most producers. However, producers enrolled in the North Dakota Farm Management Education program are beginning the process of closing out their 2023 records, analyzing the data with their instructor and learning from the past to improve the future of their operation.

Income and expenses are tracked throughout the year and then added to a software by the instructor to perform the financial analysis. This calculates profitability measures, such as current ratio, operating expense ratio and net farm income ratio, just to name a few.

These summarize the financial performance of the operation for the year, which is an extremely valuable to the producer as well as a loan officer.

To truly analyze annual performance, it is important to perform an enterprise analysis on every enterprise involved within an operation. To do this, producers work with tools provided by their instructor to track input costs of each enterprise and compare them to the output.

Once this is entered within the software, a crop enterprise analysis is generated. This analysis breaks out the return, direct expenses and overhead expenses of each field. This helps to easily compare the net return per acre versus the total expense, and answers the important question of “Did I make any money?”

Farmers are not the only beneficiaries of this analysis. Ranchers also can perform enterprise analyses to determine the efficiency of each of their herds. Admittedly, there are a lot more moving parts to a livestock enterprise, such as tracking feed per enterprise, pasture usage and, of course, calving numbers.

Worth the time

Although this seems like a daunting task, with the help of the North Dakota Farm Management Education program, all of this information can be broken down into a simple net return per head to show the profitability of each enterprise.

As a result of these analyses, we are not only able to evaluate the performance of the previous year but also make improvements for the coming year. That continuous improvement is of the utmost importance to any business owner.

When you analyze the previous year to improve efficiency and learn from the mistakes of the past, you will be able to accomplish the goal of building a better future for your operation.

Steele Stutrud is a program instructor at Dakota College at Bottineau. The North Dakota Farm Management Education program is sponsored by the North Dakota Department of Career and Technical Education. For more information, visit ndfarmmanagement.com, or contact Nikki Fideldy-Doll, state supervisor for ag education, at [email protected].