“How profitable was farming in 2010?” The answer to that question probably depends on who you ask, where they live, whether they raise primarily crops or livestock and on-farm management decisions. The South-Central, Southwest, Southeast Minnesota Farm Business Management (FBM) Summary was recently released by the Farm Business Management Instructors. This summary includes an analysis of the farm business records from farm businesses of all types and sizes in southern Minnesota. This annual farm business summary is probably one of the best gauges of the profitability and financial health of farm businesses in the region on an annual basis.
A total of 1,226 farms from throughout south-central, southwest and southeast Minnesota were in the 2010 FBM Summary. The average farm size was 693 acres. The top 20% net income farms averaged 1,514 acres, while the bottom 20% net income farms averaged only 264 acres. 57% of the farm operations were cash crop farms, 18% were total livestock operations of one type and the balance were various combinations of crop and livestock enterprises. 277 farms (23%) were under $250,000 in gross farm sales in 2010; 363 farms (30%) were between $250,000 and $500,000 in gross sales; 357 farms (29%) were between $500,000 and $1 million in gross sales; and 229 farms (19%) were above $1 million in gross sales.
In 2010, the average farm business received just 11.3% of the net farm income from government farm payments. This percentage was 54.7% as recently as 2005. The average non-farm income in 2010 was $31,302, which was up slightly compared to 2010, but below the 2008 non-farm income level of just over $34,000. The average farm business spent $784,020 in 2010 for farm business operating expenses, capital purchases and family living expenses. Most of these dollars were spent in local communities across the region.
Following are some additional key farm financial analysis figures from the 2010 Farm Business Management data:
Overall, crop operations were very profitable in 2010 – well above 2009 profit levels – due to higher grain prices and fairly steady crop input costs and land rents in 2010. Profits in the livestock sector improved significantly in 2010, compared to the previous two years, due to improved market prices and more stable operating expenses. The overall average financial health of the FBM farm businesses improved significantly in 2010, and is quite strong. Complete farm management results are available through the University of Minnesota Center for Farm Financial Management FINBIN Program.
Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at firstname.lastname@example.org.