ST. PAUL — Farms in Minnesota saw an increase in income in 2021 but the farms in southern Minnesota fared much better than those farther north where a drought was much more severe.
Median net farm income for Minnesota farms reached $166,262 in 2021, up 55% from the year before, marking the second year of improved profitability after seven more challenging years.
“The more drought-stressed regions of the state saw less improvement in profitability but they all did see improvement year over year,” said Pauline Van Nurden of the University of Minnesota’s Center for Farm Financial Management.
When breaking the state down into six regions, net farm income was up only 8% in northeast Minnesota but up 81% in south-central Minnesota. Southwest Minnesota showed a 72% increase; southeast Minnesota a 67% increase; west-central Minnesota a 44% increase and northwest Minnesota a 24% increase.
When adjusted for inflation, 2021 farm profits were the second-highest among the historical records tracked by University of Minnesota Extension and the Minnesota State Agricultural Centers of Excellence.
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The data comes from an analysis of 2,263 participants in the Minnesota State Farm Business Management programs and 108 Minnesota members of the Southwest Farm Business Management Association. About 10% of Minnesota’s farms that have gross incomes of more than $250,000 annually participate.
Northeast Minnesota tends to have smaller farms and is better known as livestock producing region. Farmers there were not as likely to be able to cash in on a run up in crop prices and instead were more in need of feed than normal and had to pay higher prices to get it.
Cash sale prices during the 2021 marketing year were up over 2020. Cash corn price received was 39% above the previous year at $4.73 and soybean price was 27% better at $11.43.
Most types of farms showed improvements in profitability and other metrics, such as access to working capital and the ability to pay down debt.
One area of farm income that declined was actually a good sign. Government payments were down about 50%.
“Improved demand lifted both grain and livestock prices for Minnesota farms. Therefore, the need for government program assistance was down substantially,” Megan Roberts of the Minnesota State Southern Agricultural Center of Excellence, said in a University of Minnesota Extension article on the report.
Some federal government payments are just now being sent out to help compensate for drought effects. And a drought aid package in the Minnesota Legislature is largely aimed at livestock producers still needs final approval.
There were reports of farmers getting out of the livestock business, and those producers may not be reflected in the data.
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“It doesn’t mean it didn’t happen for some producers, just maybe not the producers who are in the program at this time,” Van Nurden said.
Livestock numbers
Some highlights of the analysis for livestock producers:
- Dairy producers earned a median net farm income of $127,444 for 2021, down 25% from the previous year. Overall cash expenses were up 8% and the average milk price was down about $1.30 per hundredweight from 2020.
- Pork producer net earnings continued to rebound with the median producer earning $429,421, up from $310,042 in 2020. Van Nurden noted big swings in hog prices meant the lowest profit farms lost money during the year.
- Beef producers saw median net farm income for beef producers was up 82% for the year at $77,861. But most of this increase came from the cropping side of their operations. Beef finishing producers broke even on finish cattle sales on average, with the average cow-calf producer losing approximately $100 per cow for the year.
Yields were up
Despite the drought conditions, crop yields in the state were slightly above the 10-year average for corn, soybeans and sugarbeets.
“Timely rains near the end of the growing season were literally million-dollar weather events,” Josh Tjosaas, Farm Business Management instructor at Northland Community and Technical College, said in the Extension article.
