Minnesota farmers experienced a drastic reduction in farm income in 2023 primarily caused by decreasing prices for corn, soybean, and other commodities and challenging profitability for the dairy and hog sectors.
Crop yields were close to average for Minnesota, despite difficult growing conditions across much of the state. But the prices for corn, soybeans, milk, and pork fell during the year, causing an economic storm for many producers in Minnesota. On average, the farmers who submitted data to the analysis in 2023 averaged a net profit of 8 cents for every dollar in gross income, reflecting the high cost and thin margins of farming operations.
After three years of strong profits, the overall median net farm income for Minnesota farms fell to $44,719 in 2023, marking a return to the challenging levels faced from 2013 to 2019. This was down over 76% from the prior year. The average Minnesota farm saw a reduction in working capital, stagnant retained earnings, and limited profitability for the year.
What does that look like at ground level? For every dollar of income, the average Minnesota producer spent 86 cents on operating expenses and interest, with an added 6 cents going toward depreciation of farm assets, like equipment and buildings. That left 8 cents on the dollar for producers and their families.
“There was much uncertainty going into the 2023 production year for Minnesota farms. The sharp decline from 2022 profitability levels was not unexpected. Many farms were anticipating decreased commodity prices along with sticky input costs for the year,” said Pauline Van Nurden, Extension economist with the University of Minnesota’s Center for Farm Financial Management. “Most producers were in a good financial spot to handle a down year. The question now is how long these reduced profits will last.”
This analysis includes 2,335 participants in the Minnesota State Farm Business Management programs and 113 members of the Southwest Farm Business Management Association. Participating farmers represent about 10% of Minnesota’s farms with gross incomes over $250,000 annually.
The data is collected by farm management educators and housed in a database called FINBIN at the University of Minnesota.
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Categories: Minnesota, Business, Crops, Corn, Soybeans, Livestock, Hogs, Dairy Cattle