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Cattle stand in a feedlot at a farm southwest of Alexandria recently. Lowell Anderson / Forum News Service

Report: Minnesota farm income lowest in 23 years

Corn and soybean farmer Russ Elliott was born during the midst of the early 1980s farm crisis, but he has heard plenty of stories.

“I’ve heard a lot of farmers talk about it, how neighbors were just going out of business; here today, gone tomorrow, and they were pretty shocked,” said Elliott, 37, president of the Douglas County Corn and Soybean Growers.

Now, an increasing number of farmers are talking about it again.

Recently, the University of Minnesota Extension and the Minnesota State college system issued a report that found, after adjusting for inflation, that Minnesota farms earned the lowest median farm income in the past 23 years of data.  

In 2018, the reported median net income was $26,055, an 8 percent decrease from the previous year, the university said. Farmers in the lowest 20 percent reported losing nearly $72,000. The analysis examined data from 2,310 farm operations, about 10 percent of Minnesota’s commercial farmers.

“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,” said Dale Nordquist of the Center for Farm Financial Management at the University of Minnesota. “That said, the previous five years were not much better.”

This string of low-income years has impacted many Minnesota farms both financially and emotionally, he said.

“I would definitely say I’m nervous about that, if we’re getting close to that,” Elliott said.

The 1980s was the worst time for farmers since the Great Depression, and economists have been warning of similarities with the present, including an oversupply of milk and grain, international trade disputes and growing farmer debt.

Farmland retains value

Craig Will, Farm Business Management instructor at Alexandria Technical & Community College, said this week that the university’s numbers didn’t surprise him at all.

“I actually think it’s worse than that,” he said, since dairy farms that have folded in Douglas County and across the state would not be included in those statistics.  

Will has seen desperate farmers turn to credit cards to buy things they need, as they are unable to get lower-interest agriculture loans, and said that credit cards are charging 18 percent to 28 percent interest.

“They think it’s going to be better tomorrow but it doesn’t and they can’t pay the balance,” Will said.

Still, farmland has kept its value, the university said. While that’s good for farm families, it also means that the price farmers pay to rent farmland has also stayed high. And farmers are willing to keep paying high land rent because they’re hoping to get so big that they’ll save on buying supplies in bulk, Will said.

For some farmers, that strategy can work, especially if they don’t have much debt, he said. For other farmers, that formula can prove disastrous.

The university said the economic pain was felt throughout Minnesota’s primary agricultural sectors, dairy, beef, pork and crops. Pork had been the state’s lone agricultural bright spot in 2017, but fell apart in 2018, when the median pork producer earned only $27,739. That compares to more than $101,000 in the previous year. The difference was mostly due to trade issues, the university said.

Spring is critical

Not every operation struggled. Farms in the top 20 percent earned an average of $184,000.

“There are still a lot of farms out there that are successful,” said Josh Tjosaas, Northland Community & 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,” he said. “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.”

Elliott, the corn and soybean farmer, said last year’s federal aid cushioned soybean farmers from the trade dispute with China. However, he doesn’t believe a second round of aid is likely in 2019, which will pose hardships for farmers if the trade dispute lasts beyond the fall harvest.

The next three weeks will prove critical for farmers seeking operating loans for spring planting, he said.   

“Everything financially really has to be figured out,” he said. “And if you don’t, changes are going to have to be made quickly. There might have to be liquidation to some extent. What that is, I don’t know, whether it’s equipment or property.”

Farming has been plagued with many problems bringing down prices. One issue, Will said, is the advent about a decade ago of sexed semen, allowing dairy farms to select the gender of the calf. Of course they mostly choose female in order to increase the size of their herds and produce more milk, he said.

While it seemed like a great idea, he said, the oversupply of milk is costing farmers.

“They’re working their butts off only to find at the end of the year they’ve lost money,” Will said. “That’s a real demoralizing thing.”

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