Irrigation makes difference between farm profit and loss

Wednesday, May 22, 2013

Everyone knows irrigation is important to Nebraska agriculture, but a look a last year's numbers leaves little doubt.

"Crop farm with access to sufficient irrigation water were able to take advantage of excellent prices along with excellent yields," said Tina Barrett, executive director for Nebraska Farm Business at the University of Nebraska.

The combination made for record-breaking net income for commercial irrigated yellow corn as well as irrigated seed corn, she said.

The best farms continued to do well. For 15 percent of farms, accrual net income exceeded $750,000, and for a group of farms labeled Top Efficient Farms, the $527,450 average net income was an all-time new high, $100,000 higher than 2011.

The latter group had an operating expense ratio of 51.3 percent and 65.1 percent for each dollar of income for the top 15 percent of farms-they stayed ahead by controlling costs.

That's a big deal -- it now costs more than $730 per acre to raise corn, up from $100 in 2011. The average cost per bushel also rose from $3.95 in 2011 to $4.45 in 2012, but many producers are well above or below that average.

But 15 percent of farms lost money because they had a significant livestock operation or dryland crop operation. Some farmers also lost money because of risky marketing strategies that caused significant hedge account losses.

For the first time in 10 years, drops in net returns per acre went into negative numbers, Barrett said. Overall, net farm income in Nebraska fell 8 percent, though it was still the second highest average on record.

Barrett pointed out that the state has had seven years of great prosperity in Nebraska, and she hoped it would leave enough in reserve help them withstand a few tough years when they come along.

That's true, but the figure show that irrigation can mean the difference between making money and losing it, staying in business and selling out.

When litigation like the Nebraska and Kansas struggle over the Republican River Compact comes along, formerly irrigated farms that have been forced into the dryland category won't have the reserves to fall back on.

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