Those of us in Extension are frequently asked by farmers and lenders to explain what is important for a farmer to be a top producer. Farming is a complicated business that can be difficult to analyze. Profitability is often dictated by the weather conditions so a single year analysis of farms is often not revealing. Also, the use of cash accounting by farmers means that many farmers have minimal records for analysis. This paper explores possible explanations of why one farm is more profitable than another farm in order to provide advice that can help all farms improve their overall profitability. We use a 10-year balanced panels of grain farms from the Kansas Farm Management Association to ensure that weather effects are minimized and that all farms have good records. Farms are ranked each year based on the net income per acre. The 10 years of farm rankings are then averaged together to get a mean farm rank. Our initial analysis shows that few farms are consistently in the top or bottom each year while the majority are somewhere in the middle. The distribution of the mean rankings appears to be normally distributed. Thus, there appears to be a set of farms we can call top producers. The rest of the analysis will examine factors that could explain these mean rankings and why a certain group of farms are top farms. We plan to analyze, farm size, debt levels, percent rented land, crop yields, machinery investments, etc. for the final paper.
|Conference||2019 National Farm Business Management Conference|
|Presentation Type||20-Minute Presentation|