Many Minnesota livestock producers enjoyed record profits in 2014 while earnings for crop producers fell for the second straight year, according to a new report that warns both sectors will face tougher times this year.
The annual report, released Wednesday by Minnesota State Colleges and Universities system and University of Minnesota Extension, highlighted how the state's crop and livestock farmers have been on divergent paths in recent years.
"It seems like every year Is throwing a new curveball at producers," Extension economist and study co-author Dale Nordquist said. "It's been such a volatile economy in agriculture in recent years. Things are changing pretty rapidly."
Overall median net farm income for farmers participating in the study was $43,129, up 3 percent from 2013 but substantially lower than the record 2012 profits. Median income for crop farms was $17,003, down from $48,120 in 2013 and $260,940 in 2012, when Minnesota cashed in by escaping a widespread drought that sent crop prices soaring.
The report noted that Minnesota's growing season got off to a cold, wet start last year, and the corn crop never fully recovered, so yields were below average in a year when crop prices were often below production costs. Most major crop prices are projected to remain low again this year, though the report said sugar prices should be stronger due to lower imports.
Minnesota livestock producers had their best year ever in 2014, benefiting from lower corn and soybean prices after struggling for years with high feed and low meat prices, the report said. Their median income was $138,037, compared with $38,479 in 2013 and $97,699 in 2012.
Meanwhile, meat and milk prices hit all-time highs last year. While beef prices are expected to remain high this year, milk and pork prices have since fallen below the costs of production.
Nordquist said falling incomes aren't yet a crisis, though some individual farms are in trouble. Most crop producers had enough good years recently that they're still in decent financial condition, he said, but another year of burning through savings to pay their bills would stretch them thin.
"We hope this turns around in another year," he said.
Nearly all of Minnesota is in a moderate drought, according to last Thursday's U.S. Drought Monitor update. But Nordquist said it's still too early to worry about drought hurting this year's crops or farm incomes.
"If we're lucky we'll have a dry spring, get the crop in and then it will start raining," he said.
The study used complete financial records from 2,036 participants in MnSCU's farm business management education programs and 105 members of the Southwest Minnesota Farm Business Management Association. Given that Minnesota has around 25,000 farms that sold over $100,000 worth of agricultural products last year, Nordquist said it's a good sample that provides lots of useful insights.