In 2018, the median net income for Minnesota farmers was $26,055. That’s down 8% from last year and the lowest in the past 23 years, according to data tracked by the University of Minnesota Extension and agricultural Centers of Excellence within Minnesota State.
“We don’t have consistent numbers that go back that far, but it is very likely that 2018 was the lowest income year for Minnesota farms since the early 1980s,” says Dale Nordquist of the Center for Farm Financial Management at the University of Minnesota. “That said, the previous five years were not much better, so many Minnesota farms have had a string of low-income years and that has both financial and emotional impacts.”
On a positive note, farm balance sheets did not deteriorate substantially from previous years. The average farm’s debt-to-asset ratio increased slightly to 36%, still a relatively strong financial position largely supported by high farmland values. When non-farm earnings are added to the picture, the average farm family’s net worth increased by almost $30,000.
Additionally, plenty of farmers in Minnesota were profitable in 2018. Across all farms, the top 20% of earning farms netted an average of $184,000. But, farmers in the lowest 20% reported losing nearly $72,000.
“There are still a lot of farms out there that are successful,” says Josh Tjosaas, Northland Community and Technical College farm business management instructor. “And it is not just larger farms 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.”
Across all farms, 34% lost money on their farming operations in 2018. Around 40% lost net worth after family living expenses and taxes, and 53% lost working capital.
“The working capital picture would have been worse, but many farms were forced to restructure debt, moving short-term debt down the balance sheet and securing it with land and other collateral,” Tjosaas says. “Thankfully, our agricultural lending industry has been sticking with farmers when they can.”
The analysis broke down media farm income by commodity:
- Crop farmers struggled with weather, prices and trade issues in 2018, and earned $30,650 in 2018, a slight increase from the previous year but still historically low earnings.
- Dairy farmers earned less than $15,000 in 2018, due to over-production and trade issues that have weighed on milk prices, causing many dairy farms to sell their herds. In 2017, dairy farmers earned $43,000.
- Pork producers earned $27,739, down from over $101,000 in the previous year. The average hog finisher lost $11.50 per head sent to market.
- Beef producers earned just over $6,000 in 2018, virtually unchanged from the very low profitability of the previous year. Beef finishers lost almost $30 per head marketed.
The analysis included data from 2,209 participants in farm business management programs, as well as 101 members of the Southwest Minnesota Farm Business Management Association. The producers in the analysis represent around 10% of Minnesota’s commercial farmers. The number of participating dairy farms decreased by 15% in 2018, largely reflecting the number of participating dairies that sold their herds.