At the recent Illinois Farm Economic Summit (IFES) meetings, Drs. Nick Paulson and Dale Lattz of the farmdoc team shared the results of two studies that highlighted the differences in profitability between the top third and bottom third of farms in Illinois and the typical management practices of the top earners.
Nick Paulson's graph shows in 2015 that farmers in the top third of farm revenues generated had over $60 per acre of increased income than the bottom third. This may not sound like a lot of money, but if you multiply 1500 acres by the $60 additional that nets a $90,000 increase in income.
In looking at grain farms in east and central Illinois, their work showed an $85 per acre difference in revenue between the top third and middle third of farm generated revenues when averaged over the years 2014 to 2016. If you use the same 1500 acre farm and multiply each acre by $85, you see that is over $127,000 in increased farm revenue.
These big differences in revenues generated per acre were the reason for the second study, which tried to determine if there were any common factors among the top revenue generating farms. Dale Lattz shared the results of a study, where a group of soybean farmers in east and central Illinois in the top third of farm revenues were interviewed on their practices. The results showed a number of commonalities within this group of more profitable soybean farmers. These are:
- Attention to details in all aspects of the farm's operations - field operations, crop management, marketing and risk management;
- Had appropriately sized and well maintained equipment;
- Strived for the most profitable yields per acre not the highest yields per acre;
- Seeked out information from a variety of sources; and
- The importance of input cost control.