State's farm incomes edged up 1.3% in 2011

  • Article by: MIKE HUGHLETT , Star Tribune
  • Updated: March 28, 2012 - 9:46 PM

Hog, dairy and cattle farmers were helped by a surge in exports. Weather cut into crop yields.

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Corn harvest near Sauk Rapids, Minn.

Photo: Kimm Anderson, Associated Press

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Minnesota's farmers -- whether in cornfields, hog barns or cow pastures -- turned in a golden performance in 2011, even though poor weather nibbled at crop farmers' earnings.

The median income for a Minnesota farmer hit $123,041 in 2011, up 1.3 percent from 2010, marking the second consecutive year of profits well above historical averages, according to an annual farm income report released Wednesday.

The strong numbers embody the strength of the state's agricultural economy over the past two years.

"It's been one of the brightest sectors of the Minnesota economy," said Richard Joerger, director for agriculture and business at the Minnesota State College and Universities (MnSCU) system.

"It's done a lot for rural communities, and cities, too," Joerger said, referring to the sizable agribusiness sector of many Minnesota cities.

Times have been good across the board, with the hog, dairy and cattle sectors leading the way. All three are clawing their way back from an awful 2009, when many farmers lost money. But all three have been buoyed by soaring exports, notably to Asia.

Median dairy farm income in 2011 was $90,821, up 34 percent over the previous year. That was driven partly by a 22.7 percent increase in milk prices, according to the farm income report, which is done by MnSCU and University of Minnesota Extension.

The report, which is based on financial data from nearly 2,400 farmers, measures farmers' income after paying all the operating costs of running a farm.

"It was probably the best year we have had since 2007 or early 2008, and primarily what drove it were record milk prices," said Partick Lunemann, a dairy farmer near Clarissa, Minn., and president of the Minnesota Milk Producers Association.

Hog farmers' median earnings were $302,888, up 9.7 percent, buoyed by a 20 percent increase in live hog prices. Beef farm median income rose 14.8 percent to $72,134, riding a 22.8 percent jump in live cattle prices. (Higher hog farm incomes partly reflect the larger size of hog farms.)

"Livestock producers had a very good year, particularly considering the feed costs they were facing," said Dale Nordquist, an economist with the University of Minnesota's Center for Farm Financial Management.

Indeed, Lunemann said dairy cow feed costs have been running around $10 per hundred pounds of milk sold, compared with a level of $5 to $6 per hundred pounds that dairy farmers have been more used to.

Corn and soybean prices soar

Feed costs are up because the prices of corn and soybeans have been soaring. That's a good thing for Minnesota crop farmers, who last year saw corn at an average of $5.17 per bushel, up 29 percent over a year earlier, and soybeans at an average of $11.35, up about 15 percent.

But costs for inputs like fertilizer, seeds and pesticides -- combined with rising rents -- together rose 15 percent in 2010. Fertilizer costs led the way, farmers say. Meanwhile, per-bushel yields for corn and soybeans -- bashed by bad weather -- respectively fell 14 percent and 13 percent from 2010, according to the farm report.

The result: Crop farmers had a median net income last year of $146,984, down 9.7 percent from a year earlier. "If they had gotten the same yields [as in 2010], they would have had a really good year," Nordquist said. "But overall, it was still very profitable for them."

Crop farmers aren't complaining. "It was a good year, not the best we've have had, but prices were good," said John Mages, a corn and soybean farmer near Belgrade, Minn., and current president of the Minnesota Corn Growers Association.

The crop farm boom, which has translated into a farmland boom, has increasingly led retired farmers to put land up for sale, Mages said. "They want to take advantage of it now."

Corn and soybean prices are still historically high. Hog and cattle prices are also in a comfort zone for producers.

But milk prices are "heading south" this year, Lunemann said, as farmers have added cows -- i.e., supply -- across the country, and warm weather has led cows to produce more milk. "We are not going to repeat 2011 in 2012, I can tell you that," he said.

Mike Hughlett • 612-673-7003

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