Minnesota farmers continued to struggle with low prices and low profitability. Median net income was $26,055 in 2018, down 8%. After adjusting for inflation, Minnesota farms earned the lowest median farm income of the 23 years included in FINBIN. The economic pain was widespread; median incomes were $31,000 or lower for all of Minnesota’s major commodity farms; crop, dairy, pork and beef producers. Not every operation struggled though. Across all farms, the farms earning the highest net incomes, those in the top 20%, earned an average of $184,000. Those in the lower 20% lost almost ($72,000). View the 2018 FINBIN Report on Minnesota Farm Finances to learn more about the financial health of the state’s agriculture industry.
Farm Type Highlights
- Crop farm earnings saw a slight increase for the year, but earnings were still historically low. The median crop farm earned $30,650 in 2018, improved from $23,426 in 2017. Low prices persisted for all major crops. This was coupled with weather struggles and trade issues during the year. The federal Market Facilitation Program (MFP) provided some relief, especially for soybean producers. MFP was the USDA program providing payments to producers of certain commodities impacted by tariffs.
- Dairy farm profits slid in 2018 to their lowest level since 2009. The median dairy farm earned $19,813 compared to $49,919 in 2017. The average price received for milk was $16.62 per hundred pounds, down from $17.91 in 2017.
- Pork producer earnings saw the largest decrease in 2018. The median pork producer earned just $10,784, down from $122,023 in 2017.
- The median beef producer experienced negative profitability again in 2018, loosing $6,021. For the fourth straight year, beef farms had negative profits, thus not contributing to family living needs.
Farm Financial Highlights
- The average farm earned a rate of return on assets of 1.8%, down from 2.2% in 2017 (based on adjusted cost or book valuation of assets). Liquidity continued to decline. Term debt coverage averaged 1.09:1, meaning that the average farm earned just enough to cover scheduled debt payments.
- Government payments were up 82%, at $30,065 for the average farm in 2018. This increase is attributed to the USDA’s Market Facilitation Program. Even with the increased government payment level, these payments represented only 4% of gross revenue.
- The average farm’s net worth increased by about $41,000. Seventy-four percent of net worth growth resulted from farm and non-farm earnings, with the other 26% resulting from increases in estimated market value of farm assets. The average farm’s debt to asset ratio increased slightly to 43%.
- Regionally, earnings were mixed. Earnings were highest in Northwest Minnesota. Farms in the North Central/East Central region experienced the lowest levels of profitability.
- As is usually the case, profits increased with farm size. Additionally, the larger the farm, the greater the rate of return on assets, giving larger farms a slight economic advantage.
- The average family spent $59,161 to live in 2018, on par with family living spending in 2017.
You can find this information by querying the FINBIN farm financial and production benchmark database. FINBIN is free and readily accessible. Learn how to get started with FINBIN, more about the data, and our contributing benchmark partners. The Center for Farm Financial Management works is pleased to work with MN State Farm Business Management programs and University of Minnesota Extension’s Southwest MN Farm Business Management Association to compile the MN FINBIN report annually.
Pauline Van Nurden joined the FINPACK Team as an Economist in 2017.
Prior to joining the FINPACK Team, she worked as a lender. This provides her valuable industry experience and knowledge in her work with FINAPCK. Pauline holds a Master’s Degree in Agricultural Education and Bachelor’s Degree in Applied Economics, both from the University of Minnesota.