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Net farm profit subtracts all operating expenses, depreciation, interest, and owner labor from gross farm revenue. Include government payments, crop insurance indemnities, and commodity hedging gains in revenue.
Net Profit = Gross Revenue - Variable Costs - Fixed Costs - Depreciation - InterestProfit margin expresses profit as a percentage of revenue. USDA ERS data shows average US farm profit margins of 10-25% for well-managed operations, though this varies dramatically by commodity and region.
Profit Margin (%) = (Net Profit / Gross Revenue) × 100Updated: July 2026
Midwest grain farm with 500 acres, $1,200/acre gross revenue, and $950/acre total costs.
→ Net Profit: $125,000 — Margin: 20.8%
10-acre market garden with high per-acre revenue but intensive labor costs.
→ Net Profit: $35,000 — Margin: 19.4%
Assign market-rate wages for all operator and family labor hours. Without this, profit margin is overstated and the farm may actually be unprofitable on a true economic basis.
Equipment depreciation and land opportunity cost (rent equivalent for owned land) are real economic costs. Include them for true profit margin, not just cash flow margin.
Calculate your farm's net profit margin by subtracting total costs (variable + fixed) from gross revenue. Profit margin percentage reveals operational efficiency and is critical for loan applications, land purchase decisions, and year-over-year benchmarking.