• TABLE OF CONTENTS
HIDE
 Copyright
 Title Page
 Abstract
 Table of Contents
 List of Tables
 Introduction, problem statement...
 Background to Florida agricult...
 Trends in income, costs and...
 Farm debt and the balance...
 A comparison of Florida's farm...
 Reference






Group Title: Economic information report - Food and Resource Economics Department - 193
Title: Recent financial trends on Florida farms, with a background to Florida agriculture
CITATION PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00027279/00001
 Material Information
Title: Recent financial trends on Florida farms, with a background to Florida agriculture
Series Title: Economic information report
Physical Description: iv, 32 p. : ill. ; 28 cm.
Language: English
Creator: Van Blokland, P. J
Publisher: Food & Resource Economics Dept., Agricultural Experiment Stations and Cooperative Extention Service, Institute of Foos and Agricultural Sciences, University of Florida
Place of Publication: Gainesville Fla.
Publication Date: 1983
 Subjects
Subject: Farms -- Economic aspects -- Florida   ( lcsh )
Agriculture -- Economic aspects -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Statement of Responsibility: P. J. van Blokland.
General Note: Cover title.
General Note: "December 1983."
Funding: Economic information report (Gainesville, Fla.) ;
 Record Information
Bibliographic ID: UF00027279
Volume ID: VID00001
Source Institution: Marston Science Library, George A. Smathers Libraries, University of Florida
Holding Location: Florida Agricultural Experiment Station, Florida Cooperative Extension Service, Florida Department of Agriculture and Consumer Services, and the Engineering and Industrial Experiment Station; Institute for Food and Agricultural Services (IFAS), University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: aleph - 001556437
oclc - 22599491
notis - AHH0066

Table of Contents
    Copyright
        Copyright
    Title Page
        Title Page
    Abstract
        Page i
    Table of Contents
        Page ii
    List of Tables
        Page ii
        Page iii
        Page iv
    Introduction, problem statement and objectives
        Page 1
    Background to Florida agriculture
        Page 2
        The importance of farming to the state
            Page 2
        The present farm situation
            Page 3
            Page 4
            Page 5
            Page 6
        Farm structure
            Page 7
            Page 8
    Trends in income, costs and returns
        Page 9
        The general picture
            Page 9
            Page 10
            Page 11
        Analysing the present farm situation
            Page 12
            Page 13
            Page 14
    Farm debt and the balance sheet
        Page 15
        Backgrounds
            Page 15
        Trends in farm debt
            Page 15
            Page 16
            Page 17
            Page 18
        Trends in the farm balance sheet
            Page 19
            Page 20
            Page 21
        Comments
            Page 22
            Page 23
    A comparison of Florida's farm performance with the other twelve southern states
        Page 24
        Introduction
            Page 24
            Page 25
        A comparison of cash marketing and net farm income
            Page 26
        A comparison of farm debt
            Page 27
            Page 28
            Page 29
            Page 30
            Page 31
    Reference
        Page 32
Full Text





HISTORIC NOTE


The publications in this collection do
not reflect current scientific knowledge
or recommendations. These texts
represent the historic publishing
record of the Institute for Food and
Agricultural Sciences and should be
used only to trace the historic work of
the Institute and its staff. Current IFAS
research may be found on the
Electronic Data Information Source
(EDIS)

site maintained by the Florida
Cooperative Extension Service.






Copyright 2005, Board of Trustees, University
of Florida





P.J. van Blokland


Economic Information


Report 193




Recent Financial Trends on Florida


With


Florida


Food & Resource Economics Department
Agricultural Experiment Stations and
Cooperative Extension Service
Institute of Food and Agricultural Sciences
University of Florida, Gainesville 32611


a Background to
Agriculture


December 1983


Farms,

















ABSTRACT


This publication attempts to provide a background to Florida's
agriculture and current financial trends on Florida's farms. It
presents a general picture of changes in income and costs. This section
is followed by an examination of farm debt and concludes by comparing
Florida's farm performance with twelve other southern states.



Key Words: Finance, debt, ratio analysis, balance sheet, financial
institutions.


















TABLE OF CONTENTS


Page

ABSTRACT... ...................................................... i

INTRODUCTION, PROBLEM STATEMENT AND OBJECTIVES................. 1

BACKGROUND TO FLORIDA AGRICULTURE................................ 2

The Importance of Farming to the State....................... 2
The Present Farm Situation...................................... 3
Farm Structure ............................................... 7

TRENDS IN INCOME, COSTS AND RETURNS................................ 9

The General Picture................ ............ ...... ..... 9
Analysing the Present Farm Situation........................ 12

FARM DEBT AND THE BALANCE SHEET.................................... 15

Background... ........ ... ...... ....... ........... .. ....... 15
Trends in Farm Debt.......................................... 15
Trends in the Farm Balance Sheet.............................. 19
Comments .... .......................... .....*....* ****.****** 22

A COMPARISON OF FLORIDA'S FARM PERFORMANCE WITH THE OTHER
TWELVE SOUTHERN STATES.................... ................ ...... 24

Introduction..............-....... ..... ..-... ... ... -..... 24
A Comparison of Cash Marketing and Net Farm Income........... 26
A Comparison of Farm Debt.................. .................. 27

LIST OF REFERENCES........ ..... ... .............................. 32


LIST OF TABLES

Table Page
1 Specific commodity contributions to total cash receipts
on farms in Florida for selected years ranked from
1973 ($M).............................................. 5

2 Florida's cash receipts from farm marketing (including
Commodity Credit Corporation loans) per month as pro-


















TABLE OF CONTENTS


Page

ABSTRACT... ...................................................... i

INTRODUCTION, PROBLEM STATEMENT AND OBJECTIVES................. 1

BACKGROUND TO FLORIDA AGRICULTURE................................ 2

The Importance of Farming to the State....................... 2
The Present Farm Situation...................................... 3
Farm Structure ............................................... 7

TRENDS IN INCOME, COSTS AND RETURNS................................ 9

The General Picture................ ............ ...... ..... 9
Analysing the Present Farm Situation........................ 12

FARM DEBT AND THE BALANCE SHEET.................................... 15

Background... ........ ... ...... ....... ........... .. ....... 15
Trends in Farm Debt.......................................... 15
Trends in the Farm Balance Sheet.............................. 19
Comments .... .......................... .....*....* ****.****** 22

A COMPARISON OF FLORIDA'S FARM PERFORMANCE WITH THE OTHER
TWELVE SOUTHERN STATES.................... ................ ...... 24

Introduction..............-....... ..... ..-... ... ... -..... 24
A Comparison of Cash Marketing and Net Farm Income........... 26
A Comparison of Farm Debt.................. .................. 27

LIST OF REFERENCES........ ..... ... .............................. 32


LIST OF TABLES

Table Page
1 Specific commodity contributions to total cash receipts
on farms in Florida for selected years ranked from
1973 ($M).............................................. 5

2 Florida's cash receipts from farm marketing (including
Commodity Credit Corporation loans) per month as pro-












Number Page

portion of total annual cash receipts for selected
years...... ................... ...................... 6

3 Number of farms in Florida and farmland usage for the
census years 1954 through 1978....................... 7

4 Classification of Florida farms according to USDA sales
categories for the census years 1959-1978................ 8

5 Gross farm income, marketing receipts, production
expense and net farm income in Florida for selected
years ($M)............................................. 9

6 Gross and net farm income, production expenses and
ratios per farm for Florida for selected years ($)..... 11

7 Total production expenses, depreciation, interest, hired
labor and business taxes and rent for Florida farms for
selected years ($M) ................................... 13

8 Farm real estate debt outstanding in Florida by lender
for selected years ($M) ................................ 16

9 Farm non real estate debt outstanding in Florida, by
lender for selected years ($M)......................... 18

10 Balance Sheet of the farming sector in Florida for
selected years ($M).................................... 20

11 Some financial ratios for Florida farms for selected
years ......................... ................... ...... 23

12 A comparison of some of Florida's farm financial
statistics with the rest of the nation for selected
years by percent....... ...... ................ ...... .. 25

13 A comparison of the cash receipts and net farm income
of the 13 southern states for 1970, 1975 and 1980
($M)................................................... 26

14 A comparison of the real estate, non real estate and
total debt for the 13 southern states in 1970, 1975
and 1980 ($M).......................................... 27

15 Some financial ratios for the 13 southern states for
1970, 1975 and 1980... ................................ 29












Number Page

16. Number of farms, cash marketing, net farm income, non

real estate debt and total debt per farm for the 13

southern states in 1980.............................. 31



















INTRODUCTION, PROBLEM STATEMENT AND OBJECTIVES


P.J. van Blokland*


Farming in Florida, as in the nation, has been experiencing diffi-
cult times over the past few years. Agriculture nationwide has felt the
energy led inflation at least as much as other sectors of the economy.
Farmers' costs have been rising continuously and inexorably. Farmers
now fare sudden and unpredictable output price fluctuations when prices
had previously remained fairly stable for decades. Farms are undergoing
structural changes which are resulting in a few large, highly capita-
lized farms on the one hand and many small units dependent on off farm
income on the other. All this is taking place when the previously large
rewards to technology are declining and the rewards to management are
increasing. So after years of successfully concentrating on production
technologies, farmers are finding that marketing and financial acumen
are not only more profitable but essential for surviving in the 1980s.
Yet they are poorly equipped to achieve profits in these areas.
This report attempts to trace these changes through regularly
published U.S.D.A. financial statistics, highlighting the more salient
numbers which illustrate the changes. The report is obviously not
comprehensive, but it should provide a reasonably solid basis for argu-
ment, analysis and perhaps prognostication for the future.
The report has the following objectives:
1. To briefly describe some of the essential features of Florida
agriculture.
2. To present, analyze and discuss the trends in farm income,
costs and returns on Florida farms.


P.J. van Blokland is associate professor in the Food and Resource
Economics Department, University of Florida, Gainesville.
















3. To trace the more recent growth in farm debt and see how this
growth has affected the aggregate balance sheet of Florida
farming.
4. Finally, to compare Florida's farm performance with that of its
southern neighbors.
There is a strong emphasis in this report on financial statistics
and the problems that they illustrate. The writer believes that the key
to successful farming in the future lies squarely with good financial.
management. Good financial management, in its turn, requires strong
links between profitable production and a sensible marketing program.
The major managerial input that is required is good information. This
information must come from the farmers, the county agents, the agricul-
tural lenders and local politicians. This report then aims at providing
this audience, as well as agricultural students, with some of the basic
information needed to supplement the information pool necessary for good
management.


BACKGROUND TO FLORIDA AGRICULTURE


The Importance of Farming to the State

Florida's agriculture is a big business for the state. Despite its
reputation for tourism and perhaps the concurrent construction, Florida
is primarily an agricultural state, with nearly 40 percent of its land
in agriculture worked by a little over 44,000 farms. Farm cash receipts
are probably now a little over $4 billion, and they have approximately
doubled since 1973. These farm receipts are approximately equivalent to
$13 billion at retail, contributing nearly 20 percent to Gross State
Product.
Agriculture generates practically 3 percent of the labor and pro-
prietor's income in the state, which is higher than the major agricul-
tural states of Illinois and Texas and is second only to California, the
leading agricultural state in the nation. This income is greater than
















3. To trace the more recent growth in farm debt and see how this
growth has affected the aggregate balance sheet of Florida
farming.
4. Finally, to compare Florida's farm performance with that of its
southern neighbors.
There is a strong emphasis in this report on financial statistics
and the problems that they illustrate. The writer believes that the key
to successful farming in the future lies squarely with good financial.
management. Good financial management, in its turn, requires strong
links between profitable production and a sensible marketing program.
The major managerial input that is required is good information. This
information must come from the farmers, the county agents, the agricul-
tural lenders and local politicians. This report then aims at providing
this audience, as well as agricultural students, with some of the basic
information needed to supplement the information pool necessary for good
management.


BACKGROUND TO FLORIDA AGRICULTURE


The Importance of Farming to the State

Florida's agriculture is a big business for the state. Despite its
reputation for tourism and perhaps the concurrent construction, Florida
is primarily an agricultural state, with nearly 40 percent of its land
in agriculture worked by a little over 44,000 farms. Farm cash receipts
are probably now a little over $4 billion, and they have approximately
doubled since 1973. These farm receipts are approximately equivalent to
$13 billion at retail, contributing nearly 20 percent to Gross State
Product.
Agriculture generates practically 3 percent of the labor and pro-
prietor's income in the state, which is higher than the major agricul-
tural states of Illinois and Texas and is second only to California, the
leading agricultural state in the nation. This income is greater than














that generated by either general building construction or food store
sales and more than motels, hotels, amusement centers and recreation
parks together.1 Florida is truly an agricultural state.


The Present Farm Situation

Florida's farm sales come largely from crops, dominated by citrus.
Typically some 70 percent of receipts are crops, 22 percent livestock
and 8 percent poultry. Florida consistently ranks in the top 8 in the
nation in crop sales and around 22nd in livestock, though this livestock
placing underestimates the importance of the calves supplied to other
states. (Florida mainly exports small feeders of about 220 pounds which
are consequently of relatively low value).
Florida agriculture ranked 10th in the nation in cash receipts in
1980. It was 6th in crops and 23rd in livestock receipts. Its five
major commodities in order of importance (with their national ranking in
brackets) were oranges (1), cattle and calves (22), dairy products (13),
grapefruit (1) and sugar cane (1). Florida also ranks 2nd in the nation
in greenhouse and nursery products, in tomatoes and in green peas (all
after California), 8th in tobacco and 9th in eggs. There were no rank-
ing categories given for peanuts or lettuce, but Florida would certainly
be in the top 10 in the former and the top 5 in the latter category.
In 1977, Florida was 12th in the nation in cash receipts, 7th in
crop and 23rd in livestock receipts. Its five major commodities then
were oranges (1), cattle and calves (25), greenhouse and nursery (2),
dairy products (12) and tomatoes (2).Finally in this comparison, Florida
was 13th in cash receipts in 1975, 7th in crops and 26th in livestock.
Its major commodities then were oranges (1), sugarcane (1), dairy pro-
ducts (11), cattle and calves (25) and greenhouse and nursery products




1These are specific economic categories reported in "Florida
Statistical Abstracts," Bureau of Economic and Business Research, Coll.
of Business Admin., University of Florida, University Presses of
Florida, various years.















(2). So since 1975 Florida has improved its ranking in national cash
receipts.
Approximately 75 percent of farm receipts come from eight major

sales categories and this situation has been typical through all the
1970s and early 1980s. Table 1 provides more detail. These categories
in order of importance in 1980 were oranges, cattle and calves, green-
house and nursery products, dairy, grapefruit, sugar, tomatoes and
poultry products. While oranges have consistently remained in first
place, cattle since 1972 have fluctuated between second (mostly) and
sixth, with dairy (three times) and sugar (twice) taking second place.
But the main change has been the enormous growth in greenhouse and
nursery products. Yet dairying and poultry have remained of major
importance to the state's agricultural output.
These eight products now provide some $3 billion of the approxi-
mately $4 billion in farm sales. Oranges alone supply a quarter of
total farms sales in the state, and with grapefruit, perhaps around a
third. Cattle and calves, dairy and poultry products together add an
additional 20 percent or so, with sugar, tomatoes and greenhouse and
nursery a little less than this level. But even though these eight
groups dominate, Florida is practically unique in having a large number
of other important enterprises.
Some of these include soybeans, sweet corn, peppers, celery, cucum-
bers, watermelons and lettuce, ranked in that order in 1980 and collec-
tively contributing nearly 10 percent of total sales in approximately
equal amounts. Then come snap beans, peanuts, tobacco, corn and tanger-
ines, together making up a further 4 percent. There are additionally at
least a further 25 major enterprises including honey, strawberries, hay,
cabbage and avocados, with honey alone supplying over $11 million of
sales in 1980. This list shows that Florida has considerable variety in
its highly diversified agriculture. It should also indicate that the
concept of the 'average' farm in Florida may not be as meaningful as
elsewhere. It is, however, feasible that a discussion of an 'average'
Florida farm is more realistic when confined to financial statistics
than when presenting production data.












Table 1.--Specific commodity contributions to total
selected years ranked from 1973


cash receipts on farms in Florida for


Percent of Cattle Eggs Greenhouse
total cash and and and
Year receipts Oranges calves Dairy Poultry Sugar nursery Grapefruit Tomatoes


$ Million

1973 75 477 216 172 169 139 134 126 105
1974 74 435 139 211 154 255 144 119 131
1975 74 497 188 221 169 311 150 127 142
1976 73 479 209 240 191 188 241 107 175
1977 72 523 277 239 184 142 249 125 155
1978 77 1045 358 247 184 169 321 134 183
1979 76 1029 424 287 213 197 348 186 242
1980 75 936 348 318 214 234 339 243 229














It may expected that Florida's comparatively uniform climate and
its wide diversity of farming enterprises would provide a uniform flow
of cash to farms from month-to-month within any given year. It also
seems that the state's 8 major enterprises would reinforce this unifor-
mity compared with other states which rely on two or three enterprises
for the majority of their cash receipts. Yet as Table 2 shows, this is
simply not so. The domination of citrus provides a distinctly seasonal
cash flow, compared with Illinois for example, which relies mainly on
corn and soybeans, and with California, which also has a large diversity
of farm enterprises.


Table 2.--Florida's cash receipts from farm marketing (including
Commodity Credit Corporation loans) per month as proportion
of total annual cash receipts. (selected years)

Illinois California
Month 1977 (1977) 1978 1979 1980 (1980)

Jan. 10 12 12 13. 13 6
Feb. 9 9 11 11 11 5
March 11 11 10 10 10 5
April 13 10 12 11 12 6
May 14 6 14 15 14 7
June 7 7 8 7 8 9
July 3 6 4 3 4 8
Aug. 4 7 4 4 3 8
Sept. 4 6 4 4 4 9
Oct. 6 9 5 5 5 13
Nov. 8 9 6 7 7 14
Dec. 11 8 9 10 11 10

100 100 100 100 100 100




The figures show that Florida consistently receives 70 percent of
its farm cash marketing in the six month period between December and
May. At the same time it gets only 16 percent of its cash in the four
months from July to October. In comparison, the most cash heavy six
month periods for Illinois and California bring in around 60 percent
(October through March and July to December respectively). And the four













month lean periods supply 26 percent to Illinois and 22 percent to
California (June to September and January to April respectively).
Florida therefore has a more uneven cash flow than other major agricul-
tural states. This fact has consequences for its agricultural financial
situation.
Farm Structure

Having outlined the importance of agriculture to Florida and
provided a glimpse of its major enterprises and collective monthly cash
flows, 'it may now be useful to examine the farms themselves. This
therefore attempts a brief presentation of the general farm structure in
the state.
Table 3 shows the changes in farm numbers and farm land over
time. It must however be realized that as the USDA definition of a farm
changes, so do farm numbers. (And the remarkable changes shown between
1976 and 1978 with pasture and woodlands and other land is presumably
also due to definitional changes.) Therefore the numbers may not be
strictly comparable. Yet it is apparent that farm numbers, after
showing a decline between 1954 and 1974, are now on the increase.


Table 3.-- Number of farms in Florida and farmland usage for the census
years.1954 through 1978.

Farms Land in Land in Pasture and Other
Year (number) farms Cropland woodlands land

------------------1,000 acres-------------------

1954 57,543 18,162 3,398 9,853 4,910
1959 45,006 15,237 3,401 7,672 4,164
1964 40,542 15,412 3,581 7,259 4,573
1969 35,586 16,032 3,774 4,817 5,441
1974 32,466 13,199 3,772 4,019 5,459
1978 44,068 13,435 4,519 8,123 793




Nearly 60 percent of the farms in the state are less than 50 acres
and only around 9 percent have more than 500 acres. But measuring farm













size on an acreage basis is highly misleading in an area where high
value output per acre is normal. Consequently it is preferable to
classify farm size in terms of sales.
On this basis, in 1978 a little over one third of the farms in the
state have annual agricultural sales of less than $2,500, and nearly 10
percent sell over $100,000 annually. Florida therefore has a smaller
proportion of small farms and a larger proportion of large farms than
the nation as a whole. A more complete picture is shown in Table 4.
There are two obvious trends seen in the table and both follow the
nationwide trends. These trends are that farm numbers are increasing in
the >$100,000 annual sales category and decreasing in the <$20,000
categories. The reason is essentially that a full time farmer today
needs to sell at least $100,000 of output each year if he is to remain a
full time farmer. Otherwise he must supplement his income from an off
farm job.


Table 4.-- Classification of Florida farms according to USDA sales
categories for the census years 1959-1978.

Gross Sales
(dollar per ------------------------Farm Numbers---------------------
year) 1959 1964 1969 1974 1978

>100,000 2979 1,611 1,987 2,958 4,211
40-99,999 1,986 2,063 2,470 3,628
20-39,999 2,621 2,458 2,604 2,850 3,767
10-19,999 3,854 3,300 3,335 3,784 4,653
2,500-9,999 10,609 8,380 10,107 7,990 11,817
<2,500 24,943 22,807 15,490 12,414 15,992
Total 45,006 40,542 35,586 32,466 44,068



The expansion of the sales class changes is still remarkable
despite the obvious effects of inflation. In 1959 less than 7 percent
of the state's farms sold more than $40,000 annually. Ten years later
the figure was 11 percent. By 1978 there were nearly 18 percent of the













farms in these categories. In 1959 the Census of Agriculture's top
reporting category was over $40,000. In 1978 the census recorded farms
selling over $500,000 annually. Florida had over 1,000 farms in that
classification in 1978, or a little over 2 percent of its farms.
Having provided an outline of these farm trends, the next step is
to examine the financial performance of these farms over time. The
following section therefore deals with trends in income, costs and
returns.


TRENDS IN INCOME, COSTS AND RETURNS


The General Picture

Table 5 provides a synopsis of the general performance of Florida's.
agriculture since 1960 by presenting some total farm statistics. At
first glance the figures look comforting. Gross farm income in the
state has increased four and a half times since 1960, nearly three times
since 1970, probably doubled from 1973/74 and is up 14 percent since
1978. At nearly $4.3 billion in 1981, it is among the highest in the
nation.


Table 5.-- Gross farm income, marketing receipts, production expense and
net farm income for Florida in selected years, ($M,)a

Gross farm Marketing Production Net
Year income receipts expenses farm income

1960 854 779 534 322
1965 1064 998 708 360
1970 1398 1320 1002 401
1972 1777 1687 1105 682
1974 2259 2145 555 804
1977 2918 2761 1888 932
1978 3599 3433 2263 1306
1979 4037 3856 2703 1399
1980 4165 3946 3019 1203
1981 4276 4039 3343 873

aExcludes net CCC loans and farm households.













farms in these categories. In 1959 the Census of Agriculture's top
reporting category was over $40,000. In 1978 the census recorded farms
selling over $500,000 annually. Florida had over 1,000 farms in that
classification in 1978, or a little over 2 percent of its farms.
Having provided an outline of these farm trends, the next step is
to examine the financial performance of these farms over time. The
following section therefore deals with trends in income, costs and
returns.


TRENDS IN INCOME, COSTS AND RETURNS


The General Picture

Table 5 provides a synopsis of the general performance of Florida's.
agriculture since 1960 by presenting some total farm statistics. At
first glance the figures look comforting. Gross farm income in the
state has increased four and a half times since 1960, nearly three times
since 1970, probably doubled from 1973/74 and is up 14 percent since
1978. At nearly $4.3 billion in 1981, it is among the highest in the
nation.


Table 5.-- Gross farm income, marketing receipts, production expense and
net farm income for Florida in selected years, ($M,)a

Gross farm Marketing Production Net
Year income receipts expenses farm income

1960 854 779 534 322
1965 1064 998 708 360
1970 1398 1320 1002 401
1972 1777 1687 1105 682
1974 2259 2145 555 804
1977 2918 2761 1888 932
1978 3599 3433 2263 1306
1979 4037 3856 2703 1399
1980 4165 3946 3019 1203
1981 4276 4039 3343 873

aExcludes net CCC loans and farm households.













But costs are six times the 1960 level and are up nearly 530
percent since 1978. Consequently the net farm income tempers the
picture somewhat. Net farm income is less than three times the 1960
level, only 28 percent more than in 1970, and has fallen to 67 percent
of the 1978 income.
The picture becomes a little clearer if these figures are examined
per farm. Table 6 presents some of these statistics. Again it is
apparent that the gross farm income figures suggest a remarkably healthy
farming sector. The gross. in 1981 is nearly six times the 1960 level
and twice what it was 10 years earlier. But net farm income shows a
rather different situation. It doubled between 1970 and 1972, and
tripled between 1970 and 1979. But the 1981 figure is only 60 percent
of the 1979 peak, and lower than any year since 1970.
Three ratios represent these trends in a more easily digestible
form. The first ratio, gross farm income over net farm income, shows
the amount of gross income necessary to produce net farm income. For
example in 1972, $1 of net farm income was generated by $2.27 of gross
farm income. But by 1981, it took nearly $5 of gross to produce a
dollar of net. It is simply taking more gross dollars today to generate
one dollar of net farm income.
The second ratio, production expenses over net farm income shows
the production dollars required for every dollar of net farm income.
For example in 1972, for each dollar of net farm income received there
were $1.62 spent on production expenses, while in 1981, $3.83 went on
expenses. (It may be worth pointing out that production expenses are
not the same as total costs. There are, therefore, additional costs for
farmers, beyond these production costs.) But perhaps the more distinct
trend is shown by the third ratio which brings production expenses and
gross farm income together. In 1972, some 71 cents of every gross
dollar went on production expenses, and in 1981, 78 cents. All three
ratios indicate a tighter situation for Florida farmers.












Table 6.-- Gross and net farm income, production expenses
for Florida in selected years ($)


and ratios per farm


Gross Net farm Production GFI/ PE/ PE/
income income per expenses NFI NFI GFI
Year per farm farm per farm per farm per farm per farm

1960 17,074 6,399 10,675 2.67 1.67 0.63
1965 25,338 8,486 16,852 2.99 1.99 0.67
1970 35,844 10,199 25,645 3.51 2.51 0.72
1972 45,551 20,058 32,500 2.27 1.62 0.71
1974 69,580 24,764 47,896 2.81 1.93 0.69
1977 72,950 23,300 47,200 3.13 2.03 0.65
1978 81,795 29,682 51,432 2.76 1.73 0.63
1979 91,710 31,795 61,432 2.89 1.93 0.67
1980 94,659 27,340 68,614 3.46 2.51 0.72
1981 97,182 19,840 75,977 4.89 3.83 0.78














Analyzing the present farm situation

Nationwide, costs are increasing faster than income and falling
output prices are reducing income. Each of these two points will he
discussed in turn.
The tables have shown farm production expenses in Florida to be
$3.3 billion in 1981 or about $76,000 per farm. There are, however,
signs in the general economy that production costs may be rising at a
slower rate than previously. Farmers are heavily dependent on energy
intensive inputs. These inputs led the sudden cost escalation of the
early 1970s, and were later followed by interest costs. There is little
doubt that energy prices have leveled off and will not climb as fast as
they did in the past.
Interest charges however are a more recent problem. Around 1970

they were approximately 12 percent of national net farm income. In
1981, interest costs were greater than net farm income, and
unfortunately, it is likely that interest rates will continue to remain
higher than they were in most of the 1970s and therefore remain a much
higher component of farm costs than in the last decade.
Given these energy and interest scenarios, plus the serious
economic troubles of practically all of the farm machinery companies, it
does seem probable that production costs will not continue to rise as
rapidly as they did during the last ten years. Table 7 provides some
broad costs perspective. Non factor payments contribute the majority of
total production expenses for farmers in Florida. Depreciation has
apparently leveled off at around 13 percent of the total and therefore
constitutes a useful source of cash for farmers during the present hard
times.2 The hired labor proportion has fallen somewhat, but is still a





21 estimate that at least two thirds of the state's farmers are
making no capital replacement provisions today, and are living, at least
in part, on these depreciation flows. This situation cannot, obviously,
continue for much longer.












Table 7. Depreciation, interest, hired labor and business taxes and rent for Florida farms selected years, a($M)

Business
Total net rent
Non Interest Interest interest to non
factor on RE on NRE as percent Hired operator
Year payments % Depreciation % debt debt of total labor % landlords % Percent

1973 744 56 134 10 67 NA 5 336 25 65 5 100

1974 936 58 159 10 81 NA 6 360 22 79 5 100

1975 945 56 185 11 97 NA 7 382 23 79 5 100

1977 1095 54 263 13 105 47 7 402 20 105 5 100

1978 1169 52 321 14 122 58 8 477 21 100 4 100

1979 1416 54 344 13 149 79 9 556 21 102 4 100

1980 1568 54 371 13 172 106 10 602 21 107 4 100



aRounding off.

bIncludes production costs such as seed, feed, fertilizer and repairs, but excludes depreciation and taxes.

















fifth of total production costs, much higher (understandably) than for
most other agriculturally oriented states. Business taxes and net rent
have also fallen to around 4 percent.
Interest costs have risen. Interest has doubled its proportion of
total production costs since 1973, and is approaching the depreciation
figure as well as being nearly half that of hired labor, compared with
half and one fifth respectively just 7 years earlier. The ratio of
interest paid to net farm income over these years is informative. In
1973 it was probably around 0.09. In other words, for every $1 of net
farm income, 9t went to meet interest charges. By 1980, the ratio was
0.25, or 252 of interest for every $1 of net farm income.
The second point concerns output prices. Row crop prices,
particularly for grains, soybeans and cotton show little signs of short
term recovery, despite the P.I.K program and the 1982 bumper crops
considerably worsened the situation. Typically if crop prices are low,
then livestock farmers should gain. But the American consumers have
apparently reacted to what they consider to be high beef prices, and are
reducing their beef consumption for the fourth year in a row. Pork and
particularly poultry seem better buys, so cattle farmers cannot expect
much change in an already difficult situation.
Therefore net farm income will continue to be squeezed, though now
mainly from poor output prices than from steeply climbing costs. There
is unfortunately little sign that national net farm income will change
much from the present mid $20 billion level.
All this indubitably affects Florida, with its agricultural variety
and mix. But here at least some Florida farmers are fortunate. Florida
is emphatically not a grain producing state though it is still expanding
its soybean and wheat acreage. But cattle are of major importance and
it is likely that cattle will return to native range where production is
still cheaper than on the improved pastures that were a feature of the
late 1960s and early 1970s. Citrus ostensibly looks good, but it has
suffered severe weather damage in recent years and is facing harsh and
increasing foreign competition that does not and need not play by the














same rules. Yet the outlook is certainly not pessimistic. Practically
all of Florida's oranges are made into frozen concentrate, and with the

growing awareness on better diets, it does seem that Florida citrus,
despite its capacity for occasional over production, will continue its
dominant role in Florida's agriculture.
This section then, has intimated some of the problems faced by the
farmers. The next chapter will examine how these cash-type problems
have affected their financial structure.


FARM DEBT AND THE BALANCE SHEET


Background

This section presents some of the basic financial trends occurring
on Florida's farms which have resulted from the recently changing costs
and returns. The main instrument used here will be the balance sheet of
Florida farming. This instrument summarizes what has happened over the
years in terms of assets, liabilities and equity.


Trends in Farm Debt

Florida's total farm debt in 1960 was about $350 million, and by
1982 had increased over 11 times to nearly $4 billion. Since 1970 it
has grown nearly four times. Nationwide, total farm debt grew seven
fold since 1960 and is now a little over three times the 1970 level.
Florida is different from other states in the division of debt
between real and non real estate. Nationwide, some 53 percent of farm
debt is real estate while in Florida, the corresponding figure is 65
percent. These are not recent trends. Florida has consistently held a
much greater proportion of its debt as real estate.
The real estate statistics in Table 8 show that debt has increased

at about 15 percent per year over the last three years in Florida, and
that there has been a remarkable increase in Federal Land Bank














same rules. Yet the outlook is certainly not pessimistic. Practically
all of Florida's oranges are made into frozen concentrate, and with the

growing awareness on better diets, it does seem that Florida citrus,
despite its capacity for occasional over production, will continue its
dominant role in Florida's agriculture.
This section then, has intimated some of the problems faced by the
farmers. The next chapter will examine how these cash-type problems
have affected their financial structure.


FARM DEBT AND THE BALANCE SHEET


Background

This section presents some of the basic financial trends occurring
on Florida's farms which have resulted from the recently changing costs
and returns. The main instrument used here will be the balance sheet of
Florida farming. This instrument summarizes what has happened over the
years in terms of assets, liabilities and equity.


Trends in Farm Debt

Florida's total farm debt in 1960 was about $350 million, and by
1982 had increased over 11 times to nearly $4 billion. Since 1970 it
has grown nearly four times. Nationwide, total farm debt grew seven
fold since 1960 and is now a little over three times the 1970 level.
Florida is different from other states in the division of debt
between real and non real estate. Nationwide, some 53 percent of farm
debt is real estate while in Florida, the corresponding figure is 65
percent. These are not recent trends. Florida has consistently held a
much greater proportion of its debt as real estate.
The real estate statistics in Table 8 show that debt has increased

at about 15 percent per year over the last three years in Florida, and
that there has been a remarkable increase in Federal Land Bank














same rules. Yet the outlook is certainly not pessimistic. Practically
all of Florida's oranges are made into frozen concentrate, and with the

growing awareness on better diets, it does seem that Florida citrus,
despite its capacity for occasional over production, will continue its
dominant role in Florida's agriculture.
This section then, has intimated some of the problems faced by the
farmers. The next chapter will examine how these cash-type problems
have affected their financial structure.


FARM DEBT AND THE BALANCE SHEET


Background

This section presents some of the basic financial trends occurring
on Florida's farms which have resulted from the recently changing costs
and returns. The main instrument used here will be the balance sheet of
Florida farming. This instrument summarizes what has happened over the
years in terms of assets, liabilities and equity.


Trends in Farm Debt

Florida's total farm debt in 1960 was about $350 million, and by
1982 had increased over 11 times to nearly $4 billion. Since 1970 it
has grown nearly four times. Nationwide, total farm debt grew seven
fold since 1960 and is now a little over three times the 1970 level.
Florida is different from other states in the division of debt
between real and non real estate. Nationwide, some 53 percent of farm
debt is real estate while in Florida, the corresponding figure is 65
percent. These are not recent trends. Florida has consistently held a
much greater proportion of its debt as real estate.
The real estate statistics in Table 8 show that debt has increased

at about 15 percent per year over the last three years in Florida, and
that there has been a remarkable increase in Federal Land Bank














Table 8.-- Farm real estate debt outstanding January 1 by lender in Florida (selected years) ($M)

Federal Farmers' Life Individual
Land Home Insurance Commercial and
Banks Administration Companies Banks Other Total
Year $ % $ % $ % $ % $ % $

1960 26.8 11 6.8 3 68.6 29 28.5 12 109.3 46 240.0
1967 78.8 16 16.6 2 182.2 36 52.0 10 107.2 34 499.7
1970 137.6 .22 22.8 4 202.8 33 66.6 11 184.5 30 614.3
1973 240.1 30 32.9 4 209.0 26 96.0 12 266.4 28 804.5
1975 476.1 38 36.1 3 269.2 21 141.8 11 366.7 27 1267.8
1977 605.0 44 32.6 2 294.7 21 121.9 9 333.1 24 1386.6
1979 713.3 40 38.7 2 376.2 21 156.3 9 510.3 28 1785.9
1980 850.7 42 94.9 5 444.6 22 144.1 7 483.2 24 2017.5
1981 995.8 45 104.5 5 493.0 22 140.5 6 500.6 22 2234.4
1982 1,274.1 49 124.3 5 517.6 20 147.7 6 529.9 20 2593.6













lending. Between 1967 and 1982 total loans outstanding have increased
16 times and the Federal Land Bank's share has grown from 16 percent to
nearly 50 percent while other sources have generally declined. Com-
mercial banks now supply only 6 percent of the real estate debt, or less
than one third that of the life insurance companies which in turn have a
greater share in agricultural real estate in Florida than in any other
state. Individuals, which supplied the majority of real estate credit
up to the mid 1960s now supply approximately the same as these life
insurance companies.
The non real estate debt trends shown in Table 9 require more
discussion. First, non real estate debt has grown three and a half times
between 1970 and 1982, and has essentially doubled since 1978. The
increase alone since 1979 is practically the same as the total non real
estate debt in 1970, and is expanding at approximately 12 percent per
year.
Second, the institutional changes definitively illustrate the cash
flow problems faced by farmers today. The two publicly funded financial
sources of funds, namely the Farmers Home Admimistration (FmHA) and the
Commodity Credit Corporation are playing a much larger role
nationwide. In Florida in the 1970s, FmHA supplied less than 5 percent
of total non real estate debt. By 1982, its share was 22 percent and
rising. Hopefully, however, these trends are temporary aberrations,
created solely by the present economic situation. Therefore the basic
private institutional trends should continue when the farm situation
improves.
The third point concerns the trends show by private sources of
funds. Individual sources of non real estate debt, historically the
major source, will be insufficient to meet modern agricultural
requirements. Commercial banks are apparently not interested in
investing in Florida farming, thereby creating a vacuum that only the
PCAs can fill. Therefore it would be expected that the PCAs will
increase their already commanding proportion of non real estate debt in
the state.














Table 9.--Farm non real estate debt outstanding in
($M)


Florida, by lender for selected years


Production Farmers Commodity Individual
Credit Commercial Home Credit and
Association Banks Administration Corporation Other Total
Year $ % $ % $ % $ % $ % $

1960 40.2 37 33.8 31 5.5 5 NA 30.0 27 109.5
1970 161.2 42 110.1 29 10.7 3 2 <1 98.0 26 382.0
1973 192.9 42 133.5 29 .6.4 1 2 <1 124.2 27 457.0
1977 328.3 50 160.8 24 17.0 3 1 <1 161.3 24 668.4
1979 376.2 38 173.1 17 134.9 13 110 11 213.4 21 1007.6
1980 422.0 34 169.7 14 222.9 18 167 14 243.1 20 1224.7
1981 494.2 40 171.9 14 268.1 21 5 <1 312.0 25 1251.2
1982 533.2 39 186.2 14 306.1 22 9 <1 337.0 25 1371.5















The commercial banks' share of total farm debt outstanding in
Florida was 20 percent in 1960, similar to the PCAs and FLBs combined.
However, by 1982 their share had slipped to 8 percent while the Farm
Credit System's share was 46 percent. Alternatively, the Farm Credit
System's total debt in Florida in 1982 was 27 times the 1960 total,
while the commercial banks' increase is a little over 4 times their 1960
level. Apparently the Farm Credit System found it worthwhile to expand
their inputs into Florida's agriculture, while the commercial banks were
less enthusiastic. A comparison between Florida and the other Federal
Reserve Sixth District states shows that Florida agriculture receives
proportionally far less capital from commercial banks than the other
component states (Alabama, Georgia, Louisiana, Mississippi, and
Tennessee). This statement is consistent with historical and trend
statistics, with real estate or non-real estate figures.
For example, looking at financial institutions only, these states
received 16 percent of their real estate debt from commercial banks in
1982, while Florida obtained 7 percent. The national average, for
comparison, is 11 percent. There is a similar situation with non-real
estate lending. Typically between 42 percent to 45 percent of short
term loans in the sixth district (excluding Florida) have come from
commercial banks since 1970, and this proportion has increased slightly
since 1960, while the Florida proportion has declined. To put these
figures in some perspective, commercial banks nationwide in 1982
supplied 42 percent of the short term funds for agriculture, while
Florida banks provided 14 percent.


Trends in the Farm Balance Sheet

Having outlined the credit sources used by Florida farmers, it may
now be useful to turn to the effects of this credit on the total farm
balance sheet for the state.
Table 10 shows several important trends. First, farm real estate
assets in Florida have increased nearly four times since 1970. Growth
has been remarkably uniform throughout this period, yet total assets
















Table 10.- Balance Sheet of the farming sector in Florida for selected years ($M)

1970 1972 1974 1976 1978 1980 1981


ASSETS
Real Estate
Non real estate
livestock
mechanization
crops
household
total NRE


Financial
deposits and
currency
U.S. savings bonds
investment in coops
total financial


5254 5884 8634 10237 13244 18117


356
355
18
144
873


392
152
163
708


412
366
24
173
975


491
180
187
858


787
442
35
209
1473


396
125
227
748


478
585
36
219
1318


611
256
296
1163


524
930
36
234
1724


857
311
384
1552


1050
1205
73
296
2624


846
302
463
1611


Total Assets 6835 7717 10855 12718 16519 22353 24598
LIABILITIES


Real estate


Non real estate
(including C.C.C.)
Total liabilities


Equity


382
996


704 1010 1362 1524 2018


402
1016


512
1552


620
1982


792
2316


1225
3243


2234


1241
3475


5835 6611 9333 10736 14203 19110 21123


Total 6835 7717 10855 12718 16519 22353 24598


20043

1066
1280
58
340
2744


956
325
531
1812














expanded 3.6 times, non real estate assets grew a little over three
times, and financial assets only 2.5 times. Farmers are therefore
becoming much less liquid.
This growing illiquidity is a serious problem. Farm real estate,
for example, was 77 percent of total farm assets in 1980, compared with
67 percent in the early 1960s. Yet by 1981 it had increased to 82
percent, while the national average was 76 percent. Thus Florida is
even less liquid than the rest of the nation. So the relatively small
rates of growth of both non real estate and financial assets is a
worrying trend at a time when cash flow is of paramount importance.
The composition of non-real estate assets, excluding financial
assets, has changed somewhat over this last decade. Mechanization made
up 40 percent of these assets in 1970. By 1981 the proportion had
increased to 47 percent. Livestock stayed much the same at around 40
percent, though falling briefly to 35 percent in the mid 1970s. The
decline has come in household assets which are now about 12 percent
compared with 16 percent in 1970.
The liquidity squeeze is also seen with financial assets. They
were nearly 45 percent of non-real estate assets and 10 percent of total
assets in 1970. These proportions stayed fairly constant through the
late 1970s, but by 1981 had fallen to 38 percent of non-real estate
assets, and were only 7 percent of total assets.
The liability trends show some similarities with the above asset
trends. Real estate liabilities grew 3.6 times over the eleven year
period, in a fairly even fashion. Non-real estate debt increased 3.2
times, but doubled over the last five years, emphasizing the relatively
greater need for production loans. Yet non real estate debt growth in
Florida is less than the growth nationwide.
Equity growth, as usual, looks as though the farm business is doing
rather well. Over this eleven year period the net worth of Florida
farmers has expanded 3.6 times, for an average annual growth rate of 33
percent. This is a little higher than the nationwide net worth gain,
which was 30 percent per year over the same time period. So ostensibly,















Florida's farms look rather secure. But this would be a wrong
conclusion.


Comments

The findings from the previous sections will now be brought
together, and discussed. Firstly, the apparent security mentioned above
is illustrated in Table 11 where ratios including debt to asset and debt
to equity are presented.
The debt to asset and debt to equity figures look reassuring.
There has been little change in either ratio over the very different
farming situations of the 1970s and the early 1980s, in that there is
about 15 of debt for every $1 assets and around 17 of debt for each $1
of equity. But these two ratios cannot illustrate the present liquidity
problem.
Three percentages illustrate this illiquidity. For example, real
estate as a percent of total assets has increased from 76 percent in
1972 to 82 percent today. These assets can only be tapped by selling,
thereby reducing farm size. Financial assets are the most liquid
assets, but these have fallen from 11 percent in 1972 to 7 percent in
the early 1980s.. This is a dramatic decline and emphasizes cash short-
age. Finally non-real estate or productive assets have fallen from 13
percent to 11 percent. All these trends strongly indicate potential
cash shortages.
It was mentioned earlier that production expenses are apparently
levelling off. This observation is reinforced by two ratios, namely
production expenses over equity and production expenses over non real
estate debt. There are now 16 of production expenses for every $1
equity, compared to 17t earlier, and about $2.68 of these expenses for
each $1 of NRE debt as compared with to over $3 in the mid 1970s. So
these figures also look reassuring. But they do not portray the real
farm cash flow problem today, because the cash flow problem comes from
declining output prices rather than increasing production costs. This
is a new situation, in that net farm income is now more directly
affected by output price declines than by increasing costs.












Table 11. Some Financial Ratios for Florida farms for selected years.


Ratios 1970 1972 1974 1976 1978 1979 1980 1981


Debt/Assets
Debt/Equity
Real estate as a percent-
of assets(%)
Financial assets as a
percentage of assets (%)
Non real estate assets as
a percent of assets (%)

Production expenses per
$1 equity
Production expenses per
$1 non real estate debt

Non real estate debt or
over non real estate
assets owned (%)

Non real estate debt
per $1 net farm income
Total debt per $1 of
net farm income
Net farm income per
$1 of equity


14.6 16.3 14.0 .15.6
17.1 16.7 16.3 18.4


14.0


14.4 14.5


16.3 16.9 17.0


14.1
16.5


77 76 80 80 80 81


10 11


13 13 13 11 11


11 12 11


0.17 0.17 0.17 0.17 0.16 0.16 0.15 0.16


2.62 2.76 3.16 2.88 2.84


2.63 2.39 2.68


24 22 23 25 24 27 29 27


0.95 0.60 0.68 0.72 0.63 0.86 1.17 1.43


2.58 1.64 2.01 2.29 1.85


2.34 3.11 4.00


6.87 10.20 8.11 8.05 8.80 7.20 5.40 4.28
















This conclusion may be understood through the following argument.
The two ratios RE debt/assets and NRE debt/assets have stayed fairly
constant since 1970. So has RE debt/RE assets, though it has probably
declined a little to 1 per $1 of RE assets. Therefore RE debt
compared with assets does not seem to be a problem. But NRE debt/NRE
assets does show an increase. It was 22t in 1972 and 294 in 1980. So
non real estate debt is growing due to insufficient net farm income.
NRE debt/net farm income has more than doubled from 60t in 1972 to
$1.43 today, or for every $1 of net farm income, the farmer has $1.43 in
NRE debt. The total debt over net farm income ratio shows that farmers
now have $4.00 of debt per $1 of net farm income compared with $1.64
debt in 1972. Thus by 1981, for each $1 of net farm income, the farmers
owed $1.43 in NRE debt and $2.57 in RE debt. Net farm income is
declining while debt is increasing. The result is that, whereas in 1972
farmers earned 10.24 of net farm income for every dollar of equity, by
1981, this figure fell to 4.1f. Inadequate cash flow and consequently
increasing debt are creating financial problems for Florida's farmers.


A COMPARISON OF FLORIDA'S FARM PERFORMANCE WITH THE
OTHER TWELVE SOUTHERN STATES


Introduction

It may now be useful to put Florida's farm financial statistics in
perspective with its neighbors. Consequently Florida is compared in
this section with the other twelve southern states of Alabama, Arkansas,
Georgia, Kentucky, Louisiana, Mississippi, North and South Carolina,
Oklahoma, Tennessee, Texas and Virginia. These states, with Florida,
comprise an administrative area known as the Southern Regional Extension
area; both the Carolinas, Georgia and Florida constitute the Farm Credit
System's third district, and the Federal Reserve's fifth district
contains Florida, Georgia, Alabama, Tennessee, Louisiana and
Mississippi. It therefore seems a reasonable area to select.
















This conclusion may be understood through the following argument.
The two ratios RE debt/assets and NRE debt/assets have stayed fairly
constant since 1970. So has RE debt/RE assets, though it has probably
declined a little to 1 per $1 of RE assets. Therefore RE debt
compared with assets does not seem to be a problem. But NRE debt/NRE
assets does show an increase. It was 22t in 1972 and 294 in 1980. So
non real estate debt is growing due to insufficient net farm income.
NRE debt/net farm income has more than doubled from 60t in 1972 to
$1.43 today, or for every $1 of net farm income, the farmer has $1.43 in
NRE debt. The total debt over net farm income ratio shows that farmers
now have $4.00 of debt per $1 of net farm income compared with $1.64
debt in 1972. Thus by 1981, for each $1 of net farm income, the farmers
owed $1.43 in NRE debt and $2.57 in RE debt. Net farm income is
declining while debt is increasing. The result is that, whereas in 1972
farmers earned 10.24 of net farm income for every dollar of equity, by
1981, this figure fell to 4.1f. Inadequate cash flow and consequently
increasing debt are creating financial problems for Florida's farmers.


A COMPARISON OF FLORIDA'S FARM PERFORMANCE WITH THE
OTHER TWELVE SOUTHERN STATES


Introduction

It may now be useful to put Florida's farm financial statistics in
perspective with its neighbors. Consequently Florida is compared in
this section with the other twelve southern states of Alabama, Arkansas,
Georgia, Kentucky, Louisiana, Mississippi, North and South Carolina,
Oklahoma, Tennessee, Texas and Virginia. These states, with Florida,
comprise an administrative area known as the Southern Regional Extension
area; both the Carolinas, Georgia and Florida constitute the Farm Credit
System's third district, and the Federal Reserve's fifth district
contains Florida, Georgia, Alabama, Tennessee, Louisiana and
Mississippi. It therefore seems a reasonable area to select.














But in order to set the scene and make these comparisons more
meaningful, Florida is compared with the nation as a whole, in Table 12.


Table 12.-- A comparison of some of Florida's farm financial statistics
with the rest of the nation for selected years by percent

1970 1972 1974 1976 1978 1980 1981

Fla NFI as percent of
nation's NFI 2.83 3.79 2.73 4.61 4.83 4.78 3.48

Fla assets as percent of
of nation's
assets 2.17 2.19 2.27 2.21 2.24 2.23 2.26

Fla. debt as percent of
nation's debt 1.88 1.87 2.09 2.19 1.94 2.05 1.99

Fla. equity as percent of
nation's equity 2.23 2.26 2.31 2.21 2.30 2.26 2.31

Fla. cash marketing
as percent of nation's
marketing 2.61 2.76 2.32 2.67 3.04 2.80 2.82

Fla. production
expenses as percent of
nation's prod.
expenses 2.25 2.12 2.23 2.13 2.27 2.25 N.A.



These figures indicate that Florida farmers have performed rather
better than the rest of the nation. For example, the state's net farm
income share has increased from 2.8 percent in 1970 to 4.8 percent of
the nation's net farm income in 1980. Asset shares grew somewhat while
debt expanded from 1.9 to 2 percent of the U.S. total agricultural
debt. Yet cash marketing increased from 2.6 percent in 1970 to 3
percent in 1978, which reflects that Florida is enhancing its
agricultural position in the nation. Given this perspective it is
interesting to see how Florida has performed against its neighbours over
much the same time period.















A Comparison of Cash Marketing and Net Farm Income


Table 13 shows the cash receipts from farm marketing, and the net
farm income for the thirteen states in 1970, 1975 and 1980. Cash
receipts are an important indicator of cash flow and the net farm
income.
Texas dominates these figures, having over twice as much cash
receipts and considerably more net farm income than any other state and
South Carolina, Virginia and Tennessee bring up the rear. Other
rankings are also interesting. Florida was third in both categories in
1970 and 1975 but is now second, changing places with North Carolina.
Arkansas is usually around fifth with Kentucky and Oklahoma not far
behind. But the main point here is that Florida is second only to Texas
in a region where agriculture is of major importance.


Table 13. A comparison of the cash receipts and net farm income of the
13 southern states for 1970, 1975 and 1980 ($M)

Cash receipts from farm
marketing Net farm income
1970 1975 1980 1970 1975 1980

Alabama 766.8 1338.5 1836.3 225.0 394.1 256.7
Arkansas 1196.8 2137.3 2988.2 329.0 761.7 513.1
Georgia 1195.3 2143.2 2676.7 331.8 550.1 41.6
Kentucky 922.0 1441.0 2676.9 361.1 473.3 761.1
Louisiana 652.8 1115.2 1652.9 216.3 348.5 311.3
Misssissippi 867.7 1318.7 2144.7 320.1 291.5 271.4
North Carolina 1502.5 2638.3 3621.0 572.0 1035.5 1038.8
Oklahoma 1105.5 1869.9 3241.0 296.2 301.0 359.2
South Carolina 447.5 807.2 1068.6 144.0 206.5 38.4
Tennessess 702.5 1116.9 1737.1 229.8 217.9 92.9
Texas 3223.1 5836.3 8954.4 900.8 1048.1 1248.4
Virginia 594.7 989.2 1459.5 174.5 259.9 217.5
Florida 1320.2 2491.1 3804.3 400.5 967.6 1116.8















A Comparison of Farm Debt


Table 14 presents the real estate, non-real estate and total debt
for the thirteen states for the same three years.
Texas again dominates, followed by Oklahoma, with Arkansas starting
in third position but falling to sixth as Georgia and later Kentucky
increase their debt. South Carolina and Virginia again consistently
stay at the bottom.
Florida is more interesting. It rises from fifth to third place in
real estate debt. But the non-real estate trends drop Florida from
seventh in 1970 to ninth position in both 1975 and 1980. There are two
simple explanations for this situation. Either the Florida farmers are
more efficient than others and do not require the amount of NRE debt of
other states, or they cannot obtain sufficient NRE debt.


Table 14.-- A comparison of the real estate, non real estate and total
debt for the 13 southern states in 1970, 1975 and 1980 ($M)

1970 1975 1980
RE NRE TOTAL RE NRE TOTAL RE NRE TOTAL

Alabama 402 228 630 635 427 1062 1094 933 2027
Arkansas 722 510 1232 1089 726 1815 1842 1400 3242
Georgia 585 412 997 1149 741 1890 1975 1790 3765
Kentucky 599 405 1004 982 782 1764 1859 1464 3323
Louisiana 452 245 697 714 424 1138 1392 1028 2420
Mississippi 624 361 985 923 599 1522 1466 1403 2869
North Carolina 446 402 848 780 694 1474 1556 1429 3048
Oklahoma 774 698 1472 1296 1173 2470 2121 2181 4301
South Carolina 209 171 380 414 273 687 687 602 1289
Tennessee 544 367 911 906 693 1600 1615 1356 2971
Texas 2269 1705 3974 3621 2744 6365 4953 4942 9895
Virginal 346 225 571 585 352 937 1001 687 1688
Florida 614 382 996 1268 589 1857 2018 1225 3243
















Some simple ratio analysis is useful here. Three ratios were
selected and the results are recorded in Table 15. The first ratio is
cash marketing over NRE debt. The concept here is that farmers borrow
short term production funds for their anticipated marketing and lenders
provide the money if they can see "repayment through these cash
marketing. The higher the ratio, either the more conservative the
lender, or the less need for the farmer to borrow money.
The second ratio is NRE debt/net farm income. The concept behind
this ratio is that lenders are not only interested in repayment, but
also profitability. Profitability may be proxied by net farm income.
Therefore the lower the ratio, the more conservative the lender, or the
more profitable the farmer (who therefore borrows less).
The third ratio looks at NRE debt/total debt, and thus shows the
proportion of debt that goes into operating costs, breeding stock and
machinery. The lower the figure the less debt in the more liquid items,
reflecting conservative lenders and only possibly, profitable farms.
(In other words, the former is more likely).
Some interesting trends are shown by these ratios. The cash
marketing ratio illustrates a dramatic decrease in all states between
1975 and 1980 due to the increased NRE debt required to remain viable
over the last few years. Although cash marketing have also increased,
the main expansion has been in NRE debt, thus reducing the ratio. (The
previous tables have illustrated at least a doubling, and often tripling
of NRE debt in the states between 1975 and 1980, while the cash
marketing have generally grown about 30 percent to 50 percent).
But the point of interest is undoubtedly Florida. Apart from North
Carolina in 1970, Florida has had the highest ratio and the second
highest in 1970. The ratios in 1975 and particularly 1980 were twice
that of the other twelve states. Florida farmers are either less in
need of NRE debt than other states or find it harder to obtain.
The second ratio of NRE debt/NFI shows an increase between 1975 and
1980, while the 1970 to 1975 comparisons were often markedly similar.3
The increase shows the combined effects of expanding NRE debt and, in











Table 15- Some financial ratios for the 13 southern states for 1970, 1975 and 1980

Cash marketings/NRE debt NRE debt/NFI NRE Debt/Total debt ( percent)
1970 1975 1980 1970 1975 1980 1970 1975 1980

Alabama 3.36 3.13 1.97 1.01 1.08 3.63 36 40 46
Arkansas 2.35 2.94 2.13 1.55 0.95 2.72 41 40 43
Georgia 2.90 2.89 1.50 1.24 1.35 43.02 41 39 48
Kentucky 2.28 1.84 1.83 1.12 1.65 1.92 40 44 44
Louisiana 2.67 2.63 1.61 1.13 1.22 3.30 35 37 42
Mississippi 2.40 2.20 1.53 1.13 2.05 5.17 37 42 49
North Carolina 3.73 3.80 2.42 0.70 0.67 1.44 47 47 49
Oklahoma 1.58 1.59 1.48 2.36 3.90 6.07 47 47 51
South Carolina 2.62 2.96 1.78 1.19 1.32 15.67 45 40 47
Tennessee 1.91 1.61 1.28 1.60 3.18 14.60 40 43 46
Texas 1.89 2.13 1.81 1.89 2.62 3.96 43 43 50
Virginia 2.64 2.81 2.1'2 1.29 1.35 3.16 39 38 41
Florida 3.45 4.23 3.10 0.95 0.61 1.09 38 32 38














many cases, decreasing net farm income. Eight of the thirteen states
had a decline between 1975 and 1980 and all had considerable increases
in NRE debt.
Florida again is the focal point. Apart from North Carolina in
1970, Florida had the lowest ratio. The figures show it was by far the
lowest in 1980 at $1.09 of NRE debt for every $1 of net farm income,
compared with Texas at $3.96 or South Carolina at $15.67. The reason is
presumably either that farmers do not need this debt capital or are
obtaining insufficient amounts.
The final ratio pattern looks at NRE debt as a percentage of total
debt. Since 1970, Florida farmers have a much smaller proportion of NRE
debt than any other state. It seems difficult to believe that this is
due to too high RE debt loads. It does therefore appear that Florida's
farmers are either not getting the operating debt they need, or that
more operating debt could profitably be assigned to the state's farmers
(these two explanations are not quite the same thing).
These comments are re-inforced by looking at some of these figures
on a per farm basis, as shown in Table 16, using 1980 only, simply for
illustration purposes.
These figures reinforce the evidence of Florida's farming
uniqueness. Florida's farms are large in that they generate cash flows
twice that of the next closest state (Arkansas). Its net farm income is
nearly three times as great as the second ranked state. Yet debt per
farm, while the highest in the region, is only 25 percent greater than
Louisiana, the next ranked state. And even more noteworthy, Florida's
NRE debt, while more than the other twelve states, is only around $1000
more than Georgia or Oklahoma, $4000 more than Louisiana and $5000 more
than Texas. It would surely be expected, given the much greater farm
size, that Florida farm NRE debt loads should be higher.













Florida farming may be more efficient than elsewhere but it is
difficult to argue that the efficiency gap is as wide as all these
ratios imply. Florida is also dominated by citrus which provides around
a third of farm marketing. But other states rely equally as heavily or
even more on a few enterprises, and yet it still takes eight enterprises
to supply 75 percent of Florida's diverse farm sales.


Table 16.-- Number of farms, cash
real estate debt and
southern states in 1980


marketing, net farm income, non
total debt per farm for the 13


Cash Net farm NRE Total
Number Marketings income debt debt
of farms ($) ($) ($) ($)

Alabama 58,000 31,660 4,426 16,086 34,948
Arkansas 59,000 50,647 8,697 23,729 54,949
Georgia 59,000 45,468 705 30,339 63,813
Kentucky 102,000 26,244 7,462 14,353 32,758
Louisiana 37,000 44,673 8,414 27,784 65,405
Mississippi 55,000 38,995 4,935 25,509 52,164
North Carolina 93,000 38,935 11,170 16,043 32,774
Oklahoma 77,000 44,875 4,989 30,292 59,736
South Carolina 35,000 30,531 1,097 17,200 36,829
Tennessee 96,000 18,095 968 14,125 30,948
Texas 186,000 48,142 6,712 26,570 53,199
Virginia 58,000 25,164 3,750 11,845 29,103
Florida 39,000 97,546 28,636 31,410 83,154


So the simplest hypothesis for these ratios is that the farmers are
getting insufficient short term credit compared not only to the other
states in the Southern Region, but also other states in the nation. It
is to be hoped that this situation will change in the near future.

















REFERENCES


Clouser, Rodney L. and D. A. Comer, "Changes in Florida Agriculture: A
Review of the 1978 Agriculture Census." Fla. Food and Res. Econ.,
No. 44, IFAS, FCES, Jan.-Feb. 1982.

Greene, R.E.L., Kary Mathis, Leo Polopolus and John Holt. "Economic
Data for Florida Agriculture 1975-80." IFAS-12, Univ. of Fla., Nov.
1980.

USDA, ERS, "Agricultural Finance Statistics." AFS-3, Washington, D.C.,
July, 1976.

"State Farm Income Statistics," Washington, D.C., Aug. 1976.

"State Farm Income Statistics," Supplement to Statistical
Bulletin 557, Washington, D.C., Sept. 1978.

ESCS, "Balance Sheet of the Farming Sector 1978," Agri. Info.
Bulletin 416, Washington, D.C., June 1978.

"State Farm Income Statistics," Supplement to Statistical
Bulletin 609, Washington, D.C., Sept. 1978.

"State Farm Income Statistics," Supplement to Statistical
Bulletin 627, Washington, D.C., Jan. 1980.

ERS, "Economic Indicators of the Farm Sector. State Income
and Balance Sheet Statistics, 1980," Statistical Bulletin 678,
Washington, D.C., Nov. 1981.

van Blokland, P.J. "An Investigation on the Role of Commercial Banks in
Financing Florida Agriculture," Econ. Rpt. 95, FRED, Coll. of Agri.,
Univ. of Fla., Dec. 1979.

"Trends in Agricultural Finance with Reference to
Florida," Fla. Food and Res. Econ. No. 38, IFAS, FCES, Jan.-Feb.
1981.

S"Trends in Agricultural Finance in the USA and Their
Significance for the 1980s," Econ. Info. Rpt. No. 166 CES, IFAS,
Univ. of Fla., Dec. 1982.


This public document was promulgated at an annual cost of $544.60 or 54C
per copy to furnish information to Florida Farms and Florida Agriculture
with current data on cost of production for the Food and Resource Economics
Department, Institute of Food and Agricultural Sciences, and the University
of Florida.




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