Farm income hits historic low in state
MINNEAPOLIS/ST. PAUL -- Minnesota farm income is sinking to new lows. A recent report says that -- after adjusting for inflation -- Minnesota farms earned the lowest median farm income in the past 23 years of data tracked by University of Minneso...
MINNEAPOLIS/ST. PAUL - Minnesota farm income is sinking to new lows.
A recent report says that - after adjusting for inflation - Minnesota farms earned the lowest median farm income in the past 23 years of data tracked by University of Minnesota Extension and agricultural Centers of Excellence within Minnesota State.
In 2018, the reported median net income was $26,055, down 8 percent from the previous year.
Farmers in the lowest 20 percent reported losing nearly $72,000.
The analysis examined data from 2,209 participants in farm business management programs, as well as 101 members of the Southwest Minnesota Farm Business Management Association.
Participating producers represent approximately 10 percent of Minnesota's commercial farmers.
The report noted that the number of participating dairy farms decreased by 15 percent in 2018, largely reflecting the number of participating dairies that sold their herds.
While there aren't consistent records on file to prove it, it's "very likely that 2018 was the lowest income year for Minnesota farms since the early 1980s," said Dale Nordquist of the Center for Farm Financial Management at the University of Minnesota.
The sour 2018 economic report comes on the heels of at least five previous years of low farm revenues, which means many Minnesota farmers have had "a string of low-income years and that has both financial and emotional impacts," Nordquist said.
The economic pain was widespread.
The median producer in all four of Minnesota's primary agricultural products earned a net farm income of less than $31,000.
"It's important to understand that these are small businesses that don't pay themselves a salary, so that net farm income reflects what they made from the farm to feed their families," said Nordquist, who is also an Extension ag economist.
On a more positive note, farm balance sheets did not deteriorate substantially from previous years. The average farm's debt-to-asset ratio increased slightly to 36 percent, still a relatively strong financial position largely supported by farmland that has maintained its value.
When non-farm earnings are added to the picture, the average farm family's net worth increased by almost $30,000.
Not every operation struggled.
Across all farms, those in the top 20 percent of earning the highest net incomes, earned an average of $184,000.
"There are still a lot of farms out there that are successful," said Josh Tjosaas, Northland Community and Technical College farm business management instructor.
It's not just big farmers that are profiting. "We work with profitable farms of all sizes and types. But in this environment, it takes outstanding management in all phases of the operation, good timing and, maybe, a little luck to make that happen," Tjosaas said.
Across all farms, 34 percent lost money on their farming operations in 2018, and 40 percent lost net worth after family living expenses and taxes. Fifty-three percent lost working capital.
Looking ahead, USDA recently came out with a projection of somewhat higher profits for agriculture in 2019. "At this point, there are way too many variables to know where we will be a year from now," Nordquist said.