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Characteristics of Financially Successful Farms

C. Rob Holcomb

Summary

Authors: C. Robert Holcomb, Joleen Hadrich and Curtis Mahnken

Why some farmers are more profitable than others is a perennial question. The answer is of interest not only to farmers but all professionals working in the agricultural sector. Farm business data contributed to the FINBIN database from the Minnesota State Farm Business Management Program, and the Southwest Minnesota Farm Business Management Association shows significant differences in median net farm income for producers in the top 20th percentile versus the bottom 20th percentile. The objective of this study was to identify the characteristics and tendencies of highly successful farmers. As part of this study, the students from the Minnesota State Farm Business Management Program and members of the Southwest Farm Business Management Association were asked to respond to an online survey. The survey addressed a wide variety of topics but focused on the five areas of agricultural risk management; production, market, financial, legal and human resource risk. In addition to the risk management components, participants identified the types of technology utilized in their farming operations. As part of the data analysis, survey responses were matched up with the producer’s FINPACK data. Net farm income ratio was used to determine a benchmark for financial success. Financial benchmarks were then linked to the survey data to determine statistical significance for the producer characteristics and tendencies affecting financial success.

Details

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