AMES, IA--A new study of commercial farm businesses in Iowa shows that they have been able to maintain their net worth during the past four years, despite collapsing grain and livestock prices.

In addition, farms included in the study, earned incomes in 2000 that were, on average, only 10% lower than in 1997, the second highest farm income year in history. However, lower income farms experienced much larger declines than larger income operations.

High levels of income support provided to farmers by the federal government have helped maintain financial health, according to Bob Jolly, Iowa State University Extension economist who conducted the study.

Another key finding was that the farms studied in the survey on average expanded in size during the past four years, adding more land to their operations and showing increases in both assets and liabilities. Jolly said some of this expansion may have been driven by the income from government support payments, which ranged from 60% of total income from the best-performing farms to more than 100% for those farms with limited cash incomes.

Recovery of livestock prices from the lows experienced in 1998 provided some support for the maintenance of farm income and equity during the period covered, Jolly said, but the study also indicates a noticeable shift away from livestock production and toward cash grain enterprises.

Jolly said the study does not make it clear whether farmers have expanded because they view the increased government support as an opportunity to invest now in preparation for reduced support in the future, or because they believe that the support will continue, allowing continued expansion.

The study covered 633 farms operated by members of the Iowa Farm Business Association with complete financial records for the years 1996 through 2000 and a balance sheet current as of Jan. 1, 2001. Jolly said the farms profiled are larger and operated by younger farmers than the averages indicated in the 1997 Census of Agriculture, but he said the sample gives a good picture of the commercial family farm business in Iowa.

Details of the study are contained in a report titled Changes in Farm Financial Performance and Structure Between 1997 and 2001: A Case Study of Iowa Commercial Farm Businesses. The report, No. FM 1869, is available on the World Wide Web at http://www.extension.iastate.edu/pubs/fm3.htm. ISU Extension county offices can provide assistance with downloading and printing the report if needed.

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