After a great 2012, a steep drop in prices for corn took a big toll on farm income. The price pressure was exacerbated by lower yields on both corn and soybeans.
Minnesota farmers’ income dropped 78 percent in 2013, as falling commodity prices and rising costs took a heavy toll. Farmers actually lost money on sugar beets.
Net income for the median Minnesota farm was $41,899, down from $189,679 in 2012 and the lowest since 2009, according to an annual report released Thursday by Minnesota State Colleges and Universities (MnSCU) and University of Minnesota Extension.
A primary culprit was a drop in corn prices from a lofty $7 to $8 per bushel in 2012 to a more pedestrian $4 to $5 per bushel last year. Also, corn and soybean yields were down somewhat as weather conditions were worse in 2013 than the previous year.
Of all of the state’s crops, sugar beets — which are big in the Red River Valley and west central Minnesota — got hit the hardest. With falling yields and tanking sugar prices, sugar beet producers lost an average of $300 per acre last year, the universities’ report said.
“A decline from 2012 levels should not come as a big surprise,” Dale Nordquist, an economist for the U of M’s Center for Farm Financial Management, said in a news release. “We have to remember where we came from. 2012 was a very profitable year for Minnesota farms.”
In 2012, Minnesota crop farmers experienced the near-perfect combination of a bumper crop combined with high prices, the latter courtesy of drought-ruined crops in other states. But last year, Minnesota’s harvests fell short of the big hauls through much of the rest of the corn belt — large crops that pushed prices down across the nation.
In 2013, Minnesota livestock farmers did not fare much better than crop farmers, according to the universities’ report. While the price of milk, pork and beef were all up, higher feed costs and other factors pushed down livestock farm profits.
Prospects for livestock producers are better for this year, with strong prices projected. But crop farmers will see much tighter margins in 2014, the report said, as commodity prices remain low relative to 2012.
“Most crop producers were in pretty good shape to handle a down year (in 2013),” Nordquist said. That’s because they had a strong cushion from 2012. “The question is how long will these reduced profits last,” he said.
Corn and soybeans are respectively Minnesota’s two biggest crops, and the state is one of the nation’s leading producers of both commodities. Many farmers raise both.
Net return for soybean farmers dropped from $216 per acre in 2012 to $85 per acre last year. Corn growers were hammered even worse as net return per acre fell from $377 in 2012 to a negative $24 last year — in other words, an average loss.
The problem: While $4-per-bushel corn just 5 or 6 years ago would have been considered a solid price, farmers’ costs have gone up progressively since then — particularly one of their largest expenses, rent.
In 2013, Minnesota corn growers on rented land saw a 15 percent increase in rental costs on the heels of a 16 percent increase the year earlier, according to U of M Extension data.
Overall, as the agriculture boom of recent years has sent farmland prices soaring, rental costs for corn growers are up 57 percent. Those same burgeoning rental rates are affecting farmers of all stripes.
The analysis by MnSCU and the U of M is based on data from 2,063 farmers, and it measures income after payment of all operating sorts of running a farm.
Mike Hughlett • 612-673-7003