In our previous post, we discussed some of the financial highlights for Minnesota farms in 2019. In this post, we want to highlight our more detailed report. The 2019 FINBIN Report on MN Farm Finances graphically shows how Minnesota farms performed in 2019. Though FINBIN includes only Minnesota farm financial data for 2019 at this point, traditionally these Minnesota farms have been a good barometer for all farms, especially in the Midwest.
Minnesota farms continued to struggle with low profitability in 2019. Median net farm income was up slightly from the previous year at $36,211 but was still historically low. This was the seventh consecutive year of low profits. For a fourth straight year, over 30% of the farms analyzed lost money. Not all farms struggled though. The median net income for the most profitable 20% of these farms was $236,969.
Farm type highlights
Minnesota farmers will remember 2019 as one of the most challenging years in generations. Weather and trade issues dominated the agricultural news for the entire year. Yet, there were some rays of sunshine. Dairy and pork producers showed improved earnings. Cash crop producers had a very difficult production year, but Federal payments to offset trade losses kept 2019 from being a financial disaster for many Minnesota crop farms.
- Crop farms earned a median net farm income of $36,600. It could have been much worse if it had not been for the Federal Market Facilitation Program (MFP) which provided cash payments to producers of commodities impacted by retaliatory tariffs on agricultural exports. It is very likely median income for Minnesota crop producers would have been negative, had it not been for the MFP payments.
- Dairy farm earnings rebounded in 2019 from the historical lows of 2018. Milk markets have been burdened by overproduction and trade issues for the past several years and many Midwest farms, particularly smaller operations, have liquidated their herds.
- Hog farms have been on an earnings roller-coaster for the past several years. Profits came back up the hill in 2019 after very low earnings in 2018. It appears that much of, if not most, the increase earnings for these pork producers came from MFP payments.
- Profits for Minnesota beef operations remained very low in 2019. In 2019, cow-calf operators suffered major losses while cattle finishing operations made meager profits per head.
Farm financial highlights
For the finances for the average farm improved in 2019. The year was not without many challenges, price improvement for many commodities and government support payments aided Minnesota producers. Financial highlights for the year include:
- The average farm earned a rate of return on assets of 3.3%.
- Working capital improved for the average farm by over $17,000. The average farm’s current ratio was virtually unchanged from the previous year at 1.57:1.
- Term debt coverage saw a strong improvement in 2019. The average farm had a term debt coverage ratio of 1.42:1, meaning enough was earned to cover scheduled term debt payments.
- The average farm’s net worth increased by about $86,000. The majority of this came from farm and non-farm earnings.
- Regionally, earnings were mixed. Earnings were highest in Southwest Minnesota. Farms in the North Central/East Central region experienced the lowest levels of profitability.
There are 2,304 Minnesota farms included in this report and the 2019 FINBIN database. These farms represent a broad cross-section of Minnesota production agriculture. While there is no “typical” Minnesota farm, these farms include a large enough sample to provide a good barometer of commercial farming in Minnesota. FINBIN data is provided by farms that participate in Minnesota State Farm Business Management Education programs and the Southwest Minnesota Farm Business Management Association.
Farm financial and production data is included in FINBIN from several states. You can go to www.finbin.umn.edu to perform your own query. Both summary and benchmark reports can be generated for whole farm financial queries and specific crop and livestock enterprises. Learn more about FINBIN in our recent post.