TelFarm

Overview

The Whole Farm Business Analysis is the first financial report and includes all participating farms of all types.  This is a gauge of the financial performance of the average Michigan farm, completing the FINPACK FinAn business analysis through MSU Extension.  The Farm Business Summary is divided into three Whole Farm Analyses subsets: 1) All Participating Farms - Whole Farm Report, 2) Crop Farms Only – Whole Farm Report, and 3) Dairy Farms Only – Whole Farm Report. There is also “cost of production” enterprise reports for corn, corn silage, soybeans, alfalfa haylage, winter wheat, and dairy enterprises. Farms are included as “crop” or “dairy” if over 70% of their gross farm income comes from their crop sales or milk sales/dairy cattle sales, respectively.

Highlights

Interpretations

The average 2022 farm financial results were higher than in 2021. This was unexpected, as the 2021 farm financial results were higher than any of the five years prior to 2021.  Average 2022 net farm income was an impressive $434,754. The next highest annual net farm income was 2021 at $309,137. Dairy farms showed a huge increase in the milk price, from an acceptable price of $17.85 per cwt in 2021, to $25.06 per cwt in 2022. The strong crop yields and sale prices also played a large role in the great results (see average corn yields and prices on the next page). The government PPP and ERC programs did not significantly contribute to the higher results, as they essentially wrapped up in 2021.

This all contributes to an average net farm income that is the highest in many years. Expected responses should result in paying down debts and building net worth. This allows farms to be able to react to future challenges and opportunities as well as making any needed machinery and building purchases.

Crop Farms

The average crop farm had a 2022 net farm income of $287,762. This was down from $309,139 in 2021, which was the highest average net farm income over the last five years. These farms still showed a healthy increase in net worth of $312,475, in market value. The strong grain prices in 2022 and good grain yields appear to have compensated quite well with the higher input costs. The past few years have been good for Michigan grain farms, if not impacted too much with the variable weather.

Dairy Farms

The average dairy farm had an outstanding 2022 net farm income of $1,158,690, easily the highest in many years.  The milk sales price in 2022 averaged $25.06 per cwt of milk. While the 2019-2021 prices were at near breakeven milk sale price levels, the 2022 milk price was about $8.00 per cwt above that.  The dairy farms in prior analyses had an average milk sales per cwt of $17.85 in 2021, $16.62 in 2020, $17.41 in 2019, and $14.81 in 2018. Dairy farms also saw a benefit from the higher-than-average crop sale prices on excess crop yields. The recent years have been very good for the health of Michigan dairy farms.

Enterprise Analysis

Enterprise Analysis calculates the cost of production and then is adjusted by government payments received and unpaid operator labor. Crop enterprises include corn, corn silage, alfalfa haylage, soybeans, and winter wheat. Crop enterprise reports are sorted by owned and cash rent, as well as by net return. For some crops, there were not enough farms for the enterprise report. Dairy is the only livestock enterprise with enough farms to produce an enterprise report. The cost of milk production is calculated on both a per cow basis and on a per hundredweight of milk basis.

Compiled by: John Jones, TelFarm Program Director and Stephanie Lelo, TelFarm Center Support Specialist, AFRE Dept, MSU. MSU-Extension Farm Management Educators Roger Betz, Corey Clark, Florencia Colella, Jon LaPorte, Stan Moore and Frank Wardynski contributed FINPACK Farm Business Analyses for this report.