The certified flight instructor (CFI) stated, that he and his student were on a training flight. The CFI conducted a preflight inspection, and no anomalies were noted. After the preflight, he taxied to runway 24, added full power, and the engine was developing 2,400 rpm. He recalled that he rotated the airplane at 65 knots, and that during climb out, at about 300 feet, the power dropped to 2,100 rpm. He acknowledged that he knew he had a problem so he completed the emergency checklist, and made a precautionary off field landing. During the precautionary landing the airplane struck a ditch and nosed over. Examination of the engine by a Federal Aviation Administration (FAA) inspector revealed that valve train continuity was established. Further examination revealed that there were no mechanical anomalies noted with the engine, and the decrease in engine power could not be determined.