The income of Minnesota farmers dropped dramatically last year compared to the year before, according to an annual report released by the University of Minnesota Extension and Minnesota State Colleges and Universities.
Minnesota farm income fell 78 percent last year to its lowest level since 2009, the Star Tribune says. The net farm income was $41,899 for the median farm, down from $189,679 in 2012.
Although last year's decline seems significant, Dale Nordquist, Extension economist in the U of M Center for Farm Financial Management, said it isn't much of a surprise because 2012 was such a profitable year for Minnesota farms.
"Most crop producers were in pretty good shape to handle a down year (in 2013). The question is how long will these reduced profits last?" Nordquist said in the report.
Many factors contributed to the decline. Production was down for many Minnesota staples (corn and soybeans) in part because of a cold and wet spring, which delayed planting, the report says. There was also an increase in expenses, especially land rents, the Pioneer Press says. A statewide land survey found rural land prices climbed by 5 percent in the first nine months of 2013.
A dramatic drop in commodity prices also didn't help farmers' incomes. Net return per acre of corn dropped from $377 in 2012 to a loss of $24 per acre in 2013. Soybeans went from $216 to $85. The price of sugar beets dropped from $65 a ton to $35. Sugar beet producers lost an average of $300 per acre in the Red River Valley and west central Minnesota, the report says.
While the report says crop producers will see tighter margins in 2014, the plus side is farmers come into the year with "very strong working capital positions." Fertilizer prices are down, which should also help for the coming season, the report says, although other costs, including rising rent, are expected to go up.
Livestock farms didn't fare much better in 2013. Incomes for dairy fell 58 percent, hog farmer incomes fell 38 percent and beef farmer incomes fell 94 percent, the report says. But prospects are looking up for them – after several years of high feed costs, which benefited crop producers, the tables will likely be turned in 2014, the report says.
"Prices are projected to be strong for all major livestock sectors this year," Nordquist said. "And feed costs will be much lower so livestock producers should have a very good year."
That's only if hog producers can avoid a viral epidemic that's spreading among hogs, which has been devastating to pig herds and very costly for farmers, the Pioneer Press says.
The report uses data from over 2,000 participants in MnSCU farm business management education programs, 111 members of the Southwest Minnesota Farm Business Management Association and 41 participants who worked with private consultants.