Minnesota farmers' income drops a whopping 63%

Farm income in Minnesota dropped a whopping 63 percent in 2009 -- one of the largest declines in recent history -- with pork, beef and dairy producers getting hammered particularly hard, according to a report released Thursday.

Farmers were hurt by the lackluster economy. Demand was relatively weak, but supply continued unabated, pushing prices down.

"We were really kind of surprised ourselves how much incomes dropped," said Dale Nordquist, an extension economist.

The mess has put some farmers out of business, particularly hog farmers, which have been operating with steep losses. In Minnesota last year, the median hog producer lost $73,525 in 2009, compared with earning $4,876 the previous year, the report said.

Dave Preisler, executive director of the Minnesota Pork Producers Association, said his members "have seen a marked turnaround" so far this year.

With some producers out of business, and others cutting production, supply levels are now more in sync with demand. Plus, pork exports have picked up, which have also helped buoy prices, Preisler said.

Hog prices started rising slowly in January and February and have moved up considerably in the last couple of weeks, he said.

The average farmer earned a 3.1 percent rate of return on assets, down from 10.8 percent in 2008, and the lowest in 17 years in which data has been collected, the report said.

The good news: 2010 is shaping up as a better year for meat and dairy producers. Milk prices are up, and Nordquist said he thinks "the bleeding has stopped" for dairy farmers.

Dennis Swan, a beef producer and chairman of the Minnesota Beef Council, said a pickup in export demand has also helped beef farms. And as with the pork industry, beef supply is more in tune with demand. "The market is back a bit," Swan said. Beef farmers had a median loss of more than $13,000 last year, the report said.

Crop farmers also had a down year in 2009, but they fared far better than livestock producers. Plus, they were coming off a boom year in 2008.

Median income for crop farmers was $60,101, down 55 percent from 2008. Crop farmers were hurt by steep rises -- 23 percent and 35 percent respectively -- in costs for seed and fertilizer. Average prices for major crops fell in 2009, too. But "prices were kind of phenomenal in 2008," and were still above historical averages last year, Nordquist said.