Data shows 2018 to be one of the worst years for Minnesota farm income in decades, according to a July 23 press release from the University of Minnesota’s Food Industry Center. By all accounts, 2019 looks like more of the same.
As difficult finances become the new normal, the U of M is offering a suite of assistance programs for farmers in Minnesota and around the country. Extension educators say their training programs, financial counseling and economic management courses have been popular with agriculture professionals throughout the state.
Commodity prices have fallen for producers while operating expenses remain high. This puts strong pressure on farmers’ bottom lines, regardless of the commodity they grow or livestock they raise. Forces outside of the free market – like trade conflicts with traditional foreign partners – have only made the situation worse.
In 2018, the median net income for Minnesota farmers was $26,055, according to data tracked by U of M Extension and agricultural Centers of Excellence within Minnesota State. That is the lowest level in at least 20 years. Nearly every commodity saw a down year: Crop income declined by 29 percent; dairy farms were down 65 percent and pork producers suffered a 77 percent decrease.
Facing declining farm incomes, in 2017 Extension launched a free financial counseling service for farmers dealing with economic distress. Minnesota farmers looking for an in-depth analysis of their economic situation or help dealing with banking and farm business management can call 1-800-232-9077 for a free consultation with University experts.
Extension launched the financial counseling service amid warning signs indicating a prolonged downturn in farmers’ economic fortunes. It is, ironically, a situation that can be traced to the most recent economic upswing for farmers.
In the early 2010s, agricultural incomes were soaring. Commodity prices were high and farmers were producing record yields. The costs of production – land prices, rent, labor, etc. – soon increased to follow commodity prices, but farmers were selling enough product to cover those costs.
Commodity prices have since dropped: corn is selling for half as much today as it was in 2012, and soybeans are down by one-third. Meanwhile, expenses have not fallen, and farmers’ cash flow has suffered accordingly. Experts predict conditions will deteriorate even further.
“Farmers have had a good equity position – they had cash in the bank and were able to use that to cover costs,” said Dave Bau, an Extension educator in Agricultural Business Management based in Worthington. “A wet spring and late planting dates will cause lower yields for those farmers unable to get their crops planted in a timely manner. Even with recent higher corn prices, the lower yields will decrease or eliminate profits.”
Extension’s Ag Business Management team offers a handful of financial tools for farmers seeking assistance. Mediation staff manage a phone line to help farmers navigate disputes with banks and other lenders. The team conducts in-the-field training on farm transfers and estate planning, recordkeeping and required management programs for farmers who borrow from the government. Educators conduct dozens of these trainings annually.
Farmers are especially interested in estate planning and farm transitions. Bau said he takes around 1,000 calls a year from farmers and landlords who need help managing the land costs of their operations. Some have been forced to sell their land to improve cash flow.
In 2018, more than 300 people attended farm transition workshops the Extension’s Agricultural Business Management team co-hosted with Minnesota State.
Michael Boland, a professor of applied economics at the University of Minnesota, said ongoing trade wars and tariff disputes with large Minnesota trading partners – China, Mexico, Canada and Europe – have brought added uncertainty to an already-difficult situation.
“People are still optimistic about the future, but these are uncertain times,” Boland said.
To learn more about Extension’s farm financial counseling call 1-800-232-9077. Visit the Food Industry Center at foodindustrycenter.umn.edu.