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2020 a ‘profitable year’

Report shows all types of ag showing net income increases

Photo courtesy of Carolyn Olson Although the COVID-19 pandemic brought a lot of uncertainty to parts of the ag industry last year, growing conditions were positive for southwest Minnesota farmers in 2020. Carolyn Olson said her family’s farm had a good crop at harvest time. A report released this week said factors like rising commodity prices and yields helped contribute to a profitable year for Minnesota farms.

MARSHALL — Rising commodity prices, good weather and two rounds of government aid in 2020 led Minnesota farmers to their most profitable year in nearly a decade, a new report says.

A report from the University of Minnesota Extension and the Minnesota State Agricultural Centers of Excellence pegs median farm net income at nearly $107,000 last year following seven years of low profitability. By contrast, from 2013 to 2019, the state’s median annual farm profit hovered between about $27,000 and $42,700.

Statewide all farm types, including crop farms, dairy, beef and pork producers, had positive net income in 2020, the University of Minnesota Extension said Wednesday.

While the past year did carry a lot of challenges, including the COVID-19 pandemic’s impact on the livestock and ethanol industries, area farmers said factors like crop yields and prices were positive in 2020.

“We had a good fall. We had a good crop,” said Tim Jerzak, an Ivanhoe farmer and a Lincoln County Corn and Soybean Growers Association board member. Prices also went up toward the end of the year, although Jerzak said rising commodity prices also come with challenges like increased costs for supplies like fertilizer.

“It was probably one of the better growing seasons in a very long time,” Carolyn Olson, an organic farmer from the Cottonwood area, said of 2020. “I know yields were up in our neighborhood.”

Economists say 2020 provided “a sigh of relief,” though they are measured in their assessment because of the volatility of farming, the Star Tribune reported.

Without government aid, Minnesota farmers would have experienced an eighth straight year of low profitability, said Pauline Van Nurden of the University of Minnesotaís Center for Farm Financial Management.

“Farms did have a successful year last year — a profitable year — given all of the challenges of the pandemic,” Van Nurden said. “It was the first year in eight years that they’ve really seen strong profits. It’s been a pretty long downturn up until now.”

Government support played a key role in farm profits last year, accounting for 12% of gross farm income for the average producer.

“Farmers would always rather earn our income from the marketplace than the government,” said Kevin Paap, president of the Minnesota Farm Bureau. “But that was the lifeline to keep many of us going early on (in the year).”

Bob Worth, a Lake Benton farmer and president of the LCCSGA board, said government support was “very welcome” for farmers who were still struggling after the past two years.

“I don’t think people realize how bad 2018 and 2019 were,” with weather disasters and low prices hurting farmers, Worth said. Having some income from government aid “helped farmers that were on the border of having to quit,” he said.

In addition to aid, good crop yields and rising prices, Worth said another factor that was positive for farmers in 2020 was that input costs were also low. “Fuel prices were considerably lower than they are today,” he said.

The COVID-19 pandemic did have a ripple effect on Minnesota farmers in 2020.

“All of the logistics of everything was disrupted,” Olson said. Shipping was affected, and farmers that raise livestock were affected by shutdowns at meat processing plants. With restaurants closed down or limited for most of the year, farmers also lost markets for some of their products, she said.

And in turn, having less demand for meat also meant less demand for the corn and soybeans used to feed livestock, Jerzak said.

Less demand for fuel also impacted farmers who supply ethanol production, Jerzak said. He said it will be important to keep supporting renewable fuels like ethanol and biodiesel into the future.

Worth, Jerzak and Olson said they were facing this spring with a mix of caution and optimism.

“The biggest question everyone has right now is, suppose if we have a drought?” Jerzak said. It’s a question that can have a big impact in how area farmers make their plans for planting.

“It’s dry, we all know that,” Worth said. But in the short term, the drier conditions would also make it easier to get into the fields without getting stuck, he said.

Worth and Olson said a lot could change for area farmers, depending on factors ranging from global markets to weather in other parts of the Midwest, and how quickly the country recovers from the disruptions caused by COVID-19.

“Farmers in our area are more optimistic, but would still like to see expanded exports and restored domestic supply chains for food and fuel, which is the primary use for the livestock and crops raised here,” she said.

— The Associated Press contributed to this report

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