When a lender, an equipment dealer or a partner asks how much of this year’s revenue will come back next year, answer with a number from your own records instead of the bank balance. In this article’s example, a corn farm in Brookings, South Dakota, took $765,000 into the account, yet the revenue that will repeat is $518,000. A machine payment sized on the balance counts on $247,000 that will not return. On one sheet of paper, write three totals side by side: what came into the account, the revenue produced in the year, and the repeatable revenue. Size the machine payment, the hire and the draw on the third.
Repeatable revenue is this year’s acres at your normal yield, the average of recent years, and at a normal price, leaving out loans, sold assets and one-time payments. The draw is the money the family takes out of the farm each month. The values for the farm in this article are invented, and the note under each calculation says so.
Which money that came into the account is not revenue?
Loans, sales of land or machinery and money from outside the farm are not revenue, because none of it came from what the farm produced. Iowa State University Extension tells farmers to leave out sales of land, machinery or other depreciable assets, loans received and income from nonfarm sources. A depreciable asset is one that loses value with use, such as a tractor. Government payments and crop insurance proceeds do count as cash income, so they stay in, each with a mark for money that may not return.
If the farm sells breeding animals, Iowa State allows two methods. One records the sales as cash income and adjusts for the change in herd inventory. The other records a capital gain or loss and counts depreciation as an expense. Either works, but do not mix them. Write beside the line which one you use and keep it every year.
Grain delivered and not yet paid for runs the other way. It is revenue of the year even though the money has not arrived, and tracking who still owes you, and since when takes a sheet of its own.
Is the year’s revenue what you sold or what you produced?
It is what the farm produced in the twelve months of your books, whether sold or still in the bin. Iowa State adjusts for inventory so that farm products are counted in the year they are produced rather than the year they are sold. Corn from last year’s crop that you sold this year belongs to last year.
A University of Illinois example shows the gap. A farmer who counted revenue when the cash arrived took in $261,179 of grain sales and other farm income in 2002, mostly grain produced in 2001. The value of the grain in storage fell by $91,060. Add $42,300 of crop insurance proceeds and $15,100 of government direct payments, and his gross farm returns for 2002 come to $227,519: 261,179 minus 91,060 plus 57,400. His tax return reported income of $39,529, but counted by what the year produced he had a loss of $29,631.
The farmer is a teaching case, but a short crop sold out of last year’s bin looks like a normal year in the account. So write on each line of the sheet the quantity produced, in bushels harvested, calves weaned or milk shipped, and not the quantity sold.
On the farm in the example, all the corn sold came from this year’s harvest. The farm sold 120,000 bushels at $4.50 and kept 20,000 bushels in the bin. The account shows $540,000 of corn, while the farm produced 140,000 bushels worth $630,000. With the $40,000 government payment, the revenue produced in the year is $670,000.
How much of the rise came from acres, yield and price?
A revenue line is acres times yield times price, and each part has its own chance of coming back. The US Department of Agriculture’s Economic Research Service, in its September 2026 forecast, put corn receipts up 11.3%, mainly from higher quantities sold, and soybean receipts up 10.0%, mainly from higher prices. Two crops rose in the same year for different reasons.
Rennó Castro and colleagues split the value of Brazilian cotton from 1995 to 2015 into area, yield and price and found that it grew mainly on productivity, while the price effect was mostly negative. That is a national result over twenty years, not a forecast for your farm.
On the sheet, work it out beside each line with last year as the base. First count the extra acres at last year’s yield and price, then the change in yield on this year’s acres at last year’s price, then the change in price on this year’s quantity. The farm in the example grew from 600 to 700 acres, from 180 to 200 bushels an acre, and from $4.00 to $4.50 a bushel. Revenue went from $432,000 to $630,000.
Of the three parts, acres come back if the farm keeps the same ground. Price depends on the market, and the price used for each income line goes on the sheet beside it. A yield above your own average of recent years may come from one good season, so the repeatable revenue counts that line at the normal yield. A gain from better seed or practice that holds year after year raises your average and stays in.
In Kansas in 2025, the association’s dryland corn yielded 127 bushels an acre, 39% above the five-year average. Divide 127 by 1.39 and the five-year average comes to about 91 bushels an acre. The 36 bushels between the two were yield above normal, not a bigger farm. How far yield can fall below normal before revenue stops covering costs is a separate figure, how bad a year a cycle can take.
Which lines can you not count on to return?
Government payments, insurance proceeds and a single large sale are revenue of the year, but no cost that comes back every year should lean on them. The farms of the Kansas Farm Management Association averaged a net farm income, what is left after costs, of $212,494 in 2025, against $98,931 in 2024. Government payments were $110,386 of it, 52%. Crop insurance, counted net of its cost, subtracted $5,293, so the two together added $105,093. Without them, net farm income would have been $107,401.
That is an average of Kansas farms in one year, and nobody can say whether the same payments will come again. Across the United States, the Economic Research Service forecast direct government payments of $47.4 billion for 2026, $19.5 billion more than in 2025, and put supplemental and ad hoc disaster assistance payments at $26.5 billion. An ad hoc payment is set for one situation, so the farm cannot count on a repeat.
Mark each of these lines on the sheet. In the example, the $40,000 payment counts in the second total and stays out of the third.
What goes on the sheet first?
Start with the bank statements of the last two years, the sales record and the harvest and storage counts. List every deposit and sort it into the blocks of the first section. That afternoon of work gives the first total, and the second and the third follow from the lines you wrote.
The part of the difference that is not borrowed money can pay once for a debt, a repair or a machine paid in full. A machine loan payment, a salary or a larger monthly draw comes back every year, so it has to fit in what is left of the $518,000 after normal costs. Whether there is cash to cover those commitments in a slow month is a separate figure, how many months of reserve you hold.
The money side of managing a farm continues in the finance section of the library.