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Minnesota farm income soared last year

income growth spurt
Median Minnesota farm income rose from $23,368 in 2001 to $105,431 last year.
MPR Graphic/Bill Catlin

You have to go back to 1973, when Richard Nixon was President and Vietnam was the war on everyone's mind, to find a better year than 2007 for Minnesota farmers.

The median net farm income for those farms reporting was more than $105,000. That compares to about $61,000 the year before.

The findings come from farm management programs at the University of Minnesota and Minnesota State Colleges and Universities.

"What we hear is that farmers were in a pretty good mood when they came in with their books at the end of the year," said Dale Nordquist with the University of Minnesota's Center for Farm Financial Management. "By and large, it was a very good year."

Farmers were helped by rising grain prices. Corn, soybean and wheat markets all moved sharply higher in 2007, with corn nearly doubling in price.

Farmers were in a pretty good mood when they came in with their books at the end of the year.

Rising ethanol production was the most significant factor in boosting grain prices. Most ethanol is made from corn, so increased production of the alcohol fuel increased the demand and price of corn.

Ethanol also had a secondary impact. As farmers planted more acres with corn, soybean and wheat production fell. That lowered supplies of those commodities and lead to higher market prices.

The University of Minnesota's Dale Nordquist said dairy farmers also had a good year, "which is surprising with the cost of feed going up. But the price of milk kept pace with the cost of feed, at least for this year, so the dairy farmers had another pretty good year."

The average profit for dairy farmers more than doubled in 2007, rising from about $39,000 to just over $93,000.

There were sectors, however, of the farm economy that slipped from last year.

Hog farmers saw their net income fall almost 60 percent. But they had been doing well. In 2006 hog farmers in the sample group had a median net income of almost $155,000. That figure fell to about $66,000 last year.

Hog farmers faced two problems. High corn prices raised their feed costs. While at the same time the price paid for hogs at the processing plant declined sharply.

All of the good news for farmers had a direct impact on consumers. One result of rising farm profits has been higher food costs, up five percent in the last year.

Dear reader,

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Download our free e-book, Talking Sense: Have Hard Political Conversations, Better, and learn how to talk without the tension.

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