Minnesota farmers more than tripled their income last year, helping shore up the state's economy. Based on a survey of 2,500 farms, the average farmer made almost $120,000.
The farm income numbers contain some head-turning figures. Hog farms showed a median income of nearly $266,000, a huge reversal from the previous year when they lost an average of $73,000.
Grain farmers averaged more than $161,000 in net income last year. Dairy farmers have struggled in recent years, but they were able to make about $58,000 per farm.
"We had an excellent year in terms of income for farmers," says Bob Craven, an economist at the University of Minnesota Extension.
Craven says farmers can put the money to good use.
"This is essentially the amount that's there to pay all your taxes, and family living and any other investments that you want to make," said Craven.
The income data is based on farm management records from the state college system and the University of Minnesota. Rising grain and livestock prices were the main reason for the fat profits. Corn prices nearly doubled last year, and hog prices rose almost 30 percent.
On the other side of the ledger, some major farm costs actually declined. The cost of producing corn dropped 6 percent, the main factor being a 27 percent decline in fertilizer prices.
All the good news from the farm sector was a bright spot in a state economy still struggling to escape the shadow of the recession.
Minnesota farmers are buying land at record prices per acre, and showing up at local implement dealers to buy new tractors and other expensive farm implements. That's helping the stock of suppliers like Deere and company, a major equipment maker. Deere's share price has risen by 34 percent in the past six months.
Joe Mahon, a regional economist with the Minneapolis Federal Reserve Bank, says as with the current farm boom, the agricultural economy generally performs opposite what's going on in the general economy.
"So high and low points for farmers and ranchers and other ag producers tend not to coincide with recessions and booms in the broader economy," says Joe Mahon. "It's sort of on its own clock."
The outlook for farmers continues to be good in 2011. Some corn futures contracts reached all-time highs this week. At current prices, this year's Minnesota corn crop could be worth $7 billion. Soybean and wheat prices are strong.
The high grain prices could eventually hurt livestock farmers, since corn and other grains are a major source of feed for cattle and hogs. But right now livestock prices are high enough that farmers are making money.
Milk prices continue to lag, but are currently at a level where farmers can make a profit, though not as big as in the other sectors.
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