Data: 2019 another year of narrow margins for Minnesota farmers

a sugar beet harvester in a field
Sugarbeets are harvested on the Jensen farm near Stephen, Minn., in October. The sugarbeet harvest moved slowly and ended quickly in 2019 because of muddy, cold conditions.
Dan Gunderson | MPR News 2019

An annual look at Minnesota farm income paints a familiar but challenging picture for farmers around the state.

The average Minnesota farmer saw slightly higher median net farm income in 2019 over the previous year. Farm profits remained at historically low levels.

The data, collected by University of Minnesota Extension and the Agricultural Centers of Excellence, shows 28 percent of farms lost money last year; 46 percent did not earn enough to make debt payments; and 45 percent saw a decline in working capital.

“I’d prefer if we had a farm at $75,000 or $80,000 net farm income,” said Keith Olander, of the Minnesota State Northern Agricultural Center of Excellence in Staples, Minn. He said the current median income — at $36,211 — doesn't cover living expenses and debt payments.

Federal Market Facilitation payments, designed to offset farm losses from trade disputes, accounted for more than 100 percent of net income for a large share of crop farmers.

"For about 20 percent of our producers, that was critical for them to even get financing [for 2020], and then when you look at the overall profitability of that farm, that's what brought them forward. That's essentially what kept a pulse on the farm," said Olander.

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Off-farm income also played a significant part in keeping many farms above the break-even line.

Farmers in many sectors struggled last year: Crops were damaged by bad weather in many areas, and crop prices remained low. Olander said some farmers in areas not hit by bad weather earned higher profits.

Dairy prices improved in the second half of last year, but it was too late for the more than 300 dairy operations that went out of business in 2019.

Profits for pork producers did much better, with the median income at $96,245, compared with $27,799 in 2018. But hog profits were also lower than expected, because of import tariffs on United States pork imposed by China.

Farmers raising beef cattle saw continued scant profit in 2019, with median net farm income of just under $7,000 — up from $4,000 in 2018.

With farm markets in turmoil, there’s a lot of uncertainty about how farmers will fare this year.

“As we sit here looking at the data from last year, I’m almost more concerned about what we have going on right now and how long is it going to take for this to turn around and get some export markets going,” said Olander.

“We’ve seen a little bit of positive signs out of China, but not enough to move the needle and it’s driving markets to a place we haven’t seen in a number of years, as far as how low they’ve gone.”

Government payments are expected to decline this year, although the U.S. Department of Agriculture has indicated it might consider a farm relief package related to the coronavirus pandemic.

Olander is hopeful farm prices improve by fall, but he said signs suggest it won’t be a boom year on the farm.

"Mentally, this is a challenge — just to keep going on a regular basis knowing that, at least as everything looks right now, we're going to be in another losing year,” he said.