In 2018, Minnesota farmers earned their lowest median farm income in 23 years, according to the University of Minnesota Extension and agricultural Centers of Excellence within Minnesota State.

Data shows a reported median net income of $26,055 that was down 8% from the previous year.

Farmers in the lowest 20% reported losing nearly $72,000.

Farm management advisers and ag economists examined data from 2,209 participants in farm business management programs, as well as 101 members of the Southwest Minnesota Farm Business Management Association.

Participating producers represent approximately 10% of Minnesota’s commercial farmers. Notably, the number of participating dairy farms decreased by 15% in 2018, largely reflecting the number of participating dairies that sold their herds.

Dale Nordquist, with the U-M’s Center for Farm Financial Management, said in a news release that although they do not have consistent numbers that go back that far, it is likely that 2018 is the lowest income year for Minnesota farms since the early 1980s.

The economic pain was widespread. The median producer in all four of Minnesota’s primary agricultural products earned a net farm income of less than $31,000.

One positive aspect is that 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 farmland that has maintained its value. When non-farm earnings are added to the picture, the average farm family’s net worth increased by almost $30,000.

Livestock struggling

Dairy farms have been particularly hard hit by low prices for several years. Over-production and trade issues have weighed on milk prices, causing many dairy farms to sell their herds. In 2018, the median dairy farm in these farm management programs earned less than $15,000, down from $43,000 in 2017. Milk prices were down 7% in 2018 and down 33% from their highs in 2014.

In 2017, the pork industry was the one bright spot in Minnesota agriculture. However, in 2018 the median pork producer earned only $27,739, down from over $101,000 in the previous year. Pork prices were down 9% and were also largely impacted by trade issues. The average hog finisher lost $11.50 per head sent to market.

Low profits continued for beef producers. The median beef participating beef farm earned just over $6,000, virtually unchanged from the very low profitability of the previous year. Beef finishers lost almost $30 per head marketed.

Crop farms: Lower yields and prices, trade issues

Crop farmers struggled with weather, prices and trade issues in 2018. The median crop producer earned $30,650 in 2018, a slight increase from the previous year but still historically low earnings. Southern Minnesota producers especially struggled to get their crops in with persistent spring rains; local spring flooding forced many to replant fields more than once. Corn production was hit especially hard, with average corn yields down 20% across the southern part of the state. Yields were higher in the Red River Valley.

Variation in earnings

Not every operation struggled. Across all farms, the operations earning the highest net incomes, those in the top 20%, earned an average of $184,000, according to the analysis.

Across all farms, 34% lost money on their farming operations in 2018 and 40% lost net worth after family living expenses and taxes. Fifty-three percent lost working capital.

In response to the report, the Minnesota Farmers Union issued a statement, noting that the average American makes about $56,000 a year, according to the U.S. Census Bureau. MFU president Gary Wertish said the U-M report on farm income, while not surprising, is still disappointing and frustrating. He urged state and federal lawmakers to help by providing a strong farm safety net, so family farmers can make it through these tough times.

“They can end the trade war and work cooperatively with other nations to create fair agreements,” he said. “They can work to stop the rampant agribusiness consolidation that is driving up input costs for farmers, with less competition in the marketplace. And they can enact reforms that take the burdens of health care costs off the backs of many family farmers who rely on the individual market.”

Looking ahead to 2019, CoBank officials say in their latest quarterly report that U.S. agriculture will continue to face challenges with slowing domestic and global economic growth rates, unsettled trade agreements and unpredictable weather.

The report noted that world economic growth has slowed from 3.8% in 2017 and 2018, and will likely average between 3% to 3.5%. China’s economy continues to slow to 6.6% — the slowest since 1990 — as reduced trade flows and inability to stimulate domestic consumption hamper growth potential. Europe’s growth potentials have also declined as uncertainties over Brexit and reduced trade flows to Asia have dampened optimism.

Also noted is that economic growth in the U.S. slowed significantly in the fourth quarter to a 2.2% annual rate compared to the 3% to 4% growth in the previous six months. First quarter growth was significantly impacted by the government shutdown and ongoing trade disruptions.

Go online to read the full CoBank report, “Agriculture Still Waiting for Relief.”

Sources: University of Minnesota Extension, Minnesota Farmers Union and CoBank, which are solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.