I quoted this press release from University of Minnesota Extension as a counter-point to my bit this week on the BEA Income figures. Suppose I should have linked it. Here you go.
Minnesota farm income dropped sharply in 2009, report shows
ST. PAUL—Median net farm income dropped 63 percent in 2009 among more than 3,000 Minnesota farms, a new joint report by the Minnesota State Colleges and Universities system and University of Minnesota Extension shows.
The median net farm income for the combined groups of producers was $33,417 in 2009, down from $91,242 in 2008. The median means half of the producers earned more and half earned less. Net farm income is used for living expenses, income taxes, retirement and business reinvestment.
“Minnesota’s farmers faced some formidable conditions last year,” said Richard Joerger, director of the Minnesota State College and Universities system’s farm business management education programs. “The drop in income was driven largely by reduced profits for nearly all livestock producers, higher costs for crop producers, and large reductions in the value of their crop and livestock inventory.”
The analysis used data from 2,324 farms that participated in system’s farm business management programs and 95 members of the Southwest Minnesota Farm Business Management Association. The Center for Farm Financial Management at the University of Minnesota analyzed the data.
“Overall, the average farm earned a 3.1 percent rate of return on assets, down from 10.5 percent in 2008,” said Dale Nordquist, Extension economist with the University of Minnesota’s Center for Farm Financial Management. “This is the lowest return on assets for farms in these programs in the 17 years that data have been collected.”
The analysis also showed:
• Crop farmers, who had received relatively higher commodity prices, had lower profits. Median income for crop farms dropped to $60,101, down 55 percent from 2008. Average prices received for major crops dropped to $60,101, down 55 percent from 2008. Average prices received for major commodities in 2009 were: $3.80 for corn, down from $4.17 in 2008; $9.84 for soybeans, down from $10.30; and $5.81 for spring wheat, down from $7.55.
• The 399 participating dairy farms experienced a severe drop in income with many farms experiencing losses. Median income for dairy farms dropped to $2,077 from $58,081 in 2008. The average price received for milk was $13.57 per hundred pounds compared to $19.46 in 2008. Although dairy producers cut their costs of production to $15.46 per hundred pounds, they could not lower costs enough to be profitable.
• Many hog farmers experienced a second consecutive year of losses or extremely low profits. The median hog producer lost $73,525 in 2009 compared to making a modest profit of $4,876 in 2008. The hoped-for price increase never materialized as the price-per-hundred pounds sold dropped to $43.30, down from $48.53 in 2008.
• Beef farms continued to show weak profitability. The beef producer with the median net income experienced a net farm loss of $13,138, down from a loss of $6,810 in 2008.
• Corn and soybean yields were higher with corn at 180 bushels per acre up from 167 bushels in 2008; soybeans at 42 bushels an acre, up from 40; and spring wheat holding steady at 62 bushels an acre both years.
• Average cost of production for an acre of corn increased by 12 percent. Seed cost increased 23 percent, fertilizer costs went up by 35 percent, and land rent was up 9 percent.
Details of the annual analysis are available through the University of Minnesota’s Center for Farm Financial Management, which provides educational programs and software tools that are practical, timely and applicable to real-world farm situations.
University of Minnesota Extension is a partnership between federal, state and county governments that provides scientific knowledge and expertise to the public. Extension faculty and staff live and work across the state, in regional and county offices as well as university campuses and research and outreach centers.