April 13, 2006

Record farm incomes--but will they last?

Farm income in Minnesota reached record levels in 2005, says Dale Nordquist, economist with the University of Minnesota Extension Service. However, increasing production costs-especially fertilizer and fuel- lower commodity prices, and (probably) reduced livestock profits all point to reduced farm profits for 2006.

For 2005, net farm income from farming operations averaged $87,491 per farm, according to an analysis of 2,381 Minnesota farms in the University of Minnesota's FINBIN Farm Financial Database.

That's an increase of 18 percent over 2004. It's also the highest average net farm income for Minnesota farms in the history of the FINBIN database, says Nordquist, who is also associate director of the Center for Farm Financial Management.

The average land ownership was 276 acres; unchanged from 2004. The average farm operated 763 crop acres, with the operators owning 29 percent and renting 71 percent.

A more detailed summary is available at http://www.finbin.umn.edu/featuredreports/200604/april2006.pdf.

The 2005 annual reports for both the Southwestern and Southeastern Minnesota Farm Business Management Associations also show record farm incomes. The southwestern association's report shows average net farm income of $147,862 for 107 farms. This is a 50 percent increase over the average income of $98,362 in 2004.

In constant dollars, 2005 was the most profitable year for southwestern association members in the past 20 years, Nordquist says. Reasons included outstanding crop yields, high profits for hog operations and higher government payments.

Incomes of the 107 farms varied widely. One percent of the farms had negative net farm incomes in 2005, but 57 percent had incomes over $100,000. See http://www.cffm.umn.edu/Pubs/FBMA/SW_MN_FBMA_2005.pdf for the complete report.

Southeastern association farms averaged $116,688 in net farm income for 2005-an increase of three percent over 2004. Strong profits for dairy operations in southeastern Minnesota, along with higher crop yields and higher government payments helped make 2005 a very profitable year for the average association farm. The complete report is available at http://www.cffm.umn.edu/Pubs/FBMA/SE_MN_FBMA_2005.pdf.

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URL: http:// www.extension.umn.edu/extensionnews/2005/recordfarmincome.html  This page was updated April 13, 2006 .
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