Bumper crops and spotty upticks in earnings were not enough to save most sectors of Minnesota farming from the fifth consecutive year of thin profit, according to findings in the annual farm income analysis conducted by the University of Minnesota Extension.

Across all types of farms, nearly one-third of farmers lost net worth in 2017. Dairy farmers faced some of the toughest challenges as milk prices plunged in the second half of the year, a drop that continues in 2018.

The median farm income was $28,551 in 2017, down from about $36,000 a year earlier.

Here is a look at how regional farm prices break down in 2016 and 2017. (Source: University of Minnesota)

While not at the crisis proportions of the 1980s, the economy was characterized by Extension economist Dale Nordquist as “slow-bleeding” for farmers who began the year with fragile balance sheets and finances.

“Minnesota farmers came into this five-year downturn with very strong balance sheets,” Nordquist says. “But we see increased financial stress across Minnesota agriculture. Like any industry, every farm has a different cost structure, and some farms are doing better than others. There is a lot of slow bleeding going on out there. It becomes a crisis for some individual farms who don’t have a strong enough balance sheet to withstand this extended downturn.”

The analysis examined data from 2,164 participants in the Minnesota State Farm Business Management programs and 104 members of the Southwest Minnesota Farm Business Management Association. Participating producers represent approximately 10% of commercial farmers.

Details of the analysis follow. The statewide results are compiled by at the U-M’s Center for Farm Financial Management into the FINBIN database at finbin.umn.edu.

Crop farms show big yields, little profit
For the third consecutive year, Minnesota farmers produced bumper crops of Minnesota’s primary cash crops, corn and soybeans. However, as has been the case each year, high yields did not produce high profit. The median crop farm earned $23,722, down from $46,831 in 2016.

“It seems like a lot of producers have been treading water these last few years, waiting for something to happen to improve prices,” says Aaron Brudelie, Minnesota West Community and Technical College farm management instructor. “We’ve seen a little pop in prices this last few weeks [in March], with production problems in South America. That has given producers a chance to sell some 2017 crops at a profit, as well as a chance to lock in a little better price for some of their 2018 crop. We have a long way to go, but crop farmers are a little more optimistic about this next year.”

Corn
In Minnesota, yields topped 200 bushels for the second year in a row, up nearly 20% from the previous 10-year average. However, the 2017 crop also was strong across the U.S. Corn Belt and internationally, increasing stockpiles and pushing prices below the cost of production for many farmers. Prices averaged $3.25 per bushel in 2017 after topping $7 per bushel just five years ago.

Producers whose costs include farmland rental lost an average of $25 per acre of corn.

Soybeans
Soybean yields were 7% above the 10-year average at 48 bushels per acre. On average, each soybean acre contributed $28 to farm profit.

Farmers and ag economists are paying close attention to the international market in 2018. In late March, the White House announced tariffs on Chinese imports topping $50 billion, heightening concerns about retaliation targeting American crops. Soybeans are Minnesota’s top agricultural export, with China their leading destination.

Mixed results for livestock producers
The median livestock producer earned only $32,800 from farm operations for the year. Hog producers had a big turnaround, after many lost money on pig production in 2016.

Dairy
Stable milk prices in the first half of 2017 gave way to a market in which many Minnesota dairy farmers are operating at a loss.

“2017 was really a tale of two halves,” says Nate Converse, farm business management instructor at Central Lakes College in Staples. “For the first six months, we had relatively profitable prices, but the bottom fell out in the second half. Right now, many of the dairy producers I work with are losing $2 per hundredweight produced, and the outlook does not look much better for 2018.”

The median earnings for dairy farms was almost $50,000, up from $31,500 in 2016. Yet, dairy farms are seemingly under the most financial stress across the state right now. The average dairy farm made $370 per cow, up from $135 in 2016, Producers received $17.94 per hundred pounds of milk, while production costs averaged $17.24.

Currently, most producers are receiving less than $15.50 per hundredweight.

Organic producers reported a better year, with an average among the 15 farms participating in FINBIN at $102,000 in 2017. Prices for organic milk are at about $33 per hundredweight, down slightly from $35 in 2016.

Pork
Pork producers were the only farmers that, as a group, had a profitable year in 2017. The median earnings for hog farms were just over $122,000 after losing almost $5,000 in 2016. Pork producers received almost 55 cents per pound produced, up from just under 50 cents in 2016. The average farm made about $11 per head finished. Prospects for 2018 are cloudy, according to Purdue University economist Chris Hurt. Much depends on feed costs, which are inching up because of corn production problems in South America.

Beef
The median beef farm among this group of farmers lost money for the third consecutive year, netting a farm loss of $3,800 in 2017, compared to a loss of almost $12,000 in 2016. Cow-calf producers made about $17 per cow in 2017 after losing $83 per cow in 2016. Cattle finishers, those who buy calves from cow-calf producers and raise them to market weight, made $137 per head, after losing $77 per head last year.

No surprise here
A few days after the U-M study was released, the USDA NASS Minnesota Field Office issued its monthly price report.

The February 2018 average price received by farmers for corn in Minnesota was $3.12 per bushel, according to the latest Agricultural Prices report. This was 6 cents above the January price but 13 cents below the February 2017 price.

The February 2018 average price received by farmers for soybeans, at $9.24 per bushel, was up 11 cents from the January price but down 28 cents from the February 2017 price.

The February 2018 price for spring wheat was $5.65 per bushel, down 10 cents from January but up 69 cents from February 2017.

All hay prices in Minnesota averaged $108.00 per ton in February, up $3.00 from the January price and $36.00 per ton more than February 2017. The alfalfa hay price was $117.00 per ton, down $1.00 from January but $40.00 above a year ago. The other hay price was $90.00, $8.00 above January and $35.00 above a year ago.

The February average price was $15.50 per hundredweight for milk, down 40 cents from January and down $3.20 per cwt from one year ago.

Sources: U-M Extension, USDA NASS Minnesota Field Office