by Lynsey Aberle

North Dakota producers had a good year in 2023 but saw a large decrease in their average net farm income. The average net farm income last year was $139,574, down from $430,678 in 2022. Even though the overall net cash farm income was only down about $4,000, the major decrease in net farm income was due to the decrease in inventory changes from the beginning of the year to the end of the year, mostly because crop commodity prices were lower and had less prepaid inventory at the end of the year.

In 2023, the average operation enrolled in the North Dakota Farm Management Education Program farmed 2,254 crop acres and grazed 441 pasture acres. The average operator was 47 years old and had 21 years of farming experience.  

2023’s gross cash farm income was $1,279,151, of which 81.6% was from crop sales, 7.5% from livestock sales, 5% from insurance indemnities, 4.3% from other farm income and 1.6% from government payments, as shown in Table 1 below. 

Crop sales increased $150,262 and livestock sales increased $11,111 in comparison with 2022. Government payments decreased about $98,000 and insurance payments decreased about $38,000 from 2022.

The average total cash farm expense was $988,382, increasing $32,886 from the average total cash expense in 2022. Gross farm income increased $29,233 from 2022, which about covered the increase in farm expenses. Interest rates were higher in 2023, yet there still was an increase in the amount of borrowed money due to the higher farm expenses.

Debt paid in 2023 also was higher, along with an increase of $17,610 in the amount of interest paid. With more money being borrowed, there was an increase in the average debt-to-asset ratio from 28% in 2022 to 32% in 2023.

North Dakota producers saw a decrease in profitability measures in 2023. The rate of return on assets decreased to 3.1% from 11.6% in 2022, and the rate of return on equity decreased to 2.1% from 15.9% in 2023. This indicates that borrowed money wasn’t quite making a return to the operations with a lower return on equity.

In addition, the 2023 average term debt coverage ratio was 1.51, meaning farmers and ranchers produced enough income to cover intermediate and long-term debt payments about 1.5 times. This was a decrease from 4.31% in 2022. 

In 2023, the average operating expense ratio was 77.2% and the average interest expense ratio was 5%. This means that for every dollar a producer earned in 2023, 77 cents were spent on operating expenses and 5 cents were spent on interest. Of that dollar, about 8 cents also were allocated to depreciation. This leaves 10 cents of that dollar as profit for the year.

In 2023, producers saw an overall slight increase in yield on all crops, except there was a small decrease in yields for soybeans, sunflowers and durum. The five most profitable crops grown in 2023 on cash-rented land in North Dakota are as follows:

The top 10 crops produced in North Dakota during 2023 are outlined in Table 2 below, showing the average net return for each crop on cash-rented land.

In 2023, North Dakota cattle producers saw a substantial increase in beef cow-calf profits. Feed costs increased to $543.52 per cow, and calf sale weights decreased to 520 pounds, but beef producers saw an increase in calf prices compared with 2022.

The average net return in 2023 was $236.98 per cow, which is an increase of $285.45 per cow from 2022. The average weaning weight was 521 pounds, and the average weight of calves sold was 520 pounds with an average sale price of $262.75 per hundredweight.

In comparison, producers who chose to enterprise their cow-calf with backgrounding calves until sold also saw a significant increase in profits in 2023. The average net return was $433.96 per cow, or about a $400 higher return from the previous year. Feed costs were $523.30 per cow, which was about $20 lower than the cow-calf enterprise until weaning.

The average weaning weight was lower at 511 pounds, and calves sold at an average of 533 pounds at $261.76 per hundredweight. Producers who enterprise their cow-calf herd with backgrounding charge the backgrounding costs against the whole herd instead of splitting into a separate cow-calf and beef-backgrounding enterprise.

The 2023 beef-backgrounding enterprise showed an average net return of $43.57 per head, which was slightly higher than the 2022 average net return of $42.55 per head. On average, backgrounders sold at a weight of 705 pounds at $202.20 per hundredweight, which equates to an average of $1,425.51 per head and is about $340 more than in 2022.

Overall, producers enrolled in the 2023 North Dakota Farm Management Education Program did well with experiencing moderately increased yields, selling old grain earlier in the year and capturing higher values in the livestock market despite falling commodity prices both during and after harvest, along with receiving significantly less income from government payments and crop insurance.

The data within this article was gathered by 11 North Dakota Farm Management Education programs. Instructors were able to gather information from 230 farms in different regions throughout the state. If you’d like to see your region’s annual report or the full state average report, please contact your local North Dakota Farm Management Education instructor or visit ndfarmmanagement.com.

Aberle is a farm management education instructor at Dakota College in Bottineau.