Heydays in farm country

A resurgent farm sector is helping to lift rural Minnesota's economy, as newly confident farmers buy equipment and reinvest in their operations.

Business at Minnesota Ag Group's implement store in Kasson has been booming this spring, despite increasing costs in new machinery, said owner-manager Craig Poppe. Farmers would rather re-invest in their operations than pay increased taxes on their new income, he said.

"Some of the equipment they're buying might cost as much as their farm did initially," Poppe said. "That's tough on them psychologically."

And the good mood — and cash — is spreading through the economy, especially in rural, agriculture-based towns.

"We can broadly say in terms of the economy, agriculture is a bright spot. It's helping turn Minnesota around," said University of Minnesota Extension economist Robert Craven.

Data released Thursday by the University of Minnesota shows that farmers in the state, especially grain farmers, made solid gains in farm income in 2010.

Auctioneers have been getting record prices for used equipment since commodity prices rose in November, said Greg Peterson of Rochester, owner-publisher of the Machinery Pete publication and website. Peterson monitors vast amounts of data on the prices auctioneers are getting for used farm equipment.

In some cases, used tractors are selling for more than they did when they were new.

 "The new equipment market is hot, but the used equipment market is twice as hot," he said.

Still, the good news comes with an asterisk.

"These results occurred in an extremely risky and volatile environment," said Richard Joerger, system director for agriculture and business at the Minnesota State Colleges and Universities system.

In the stretch

Southeastern Minnesota grain farmers, in particular, experienced an amazing year because of ideal weather and a stunning shift in commodity prices during the fall, caused in part by poor farming conditions in eastern Europe.

And it was the run-up in crop prices at the end of the year that drove profitability, said Dale Nordquist, a University of Minnesota Extension economist.

Statewide, the median net income among crop farmers more than doubled last year, rising from $60,128 in 2009, to $161,441 in 2010.

"They're coming off one of the best crop years they've ever had," said Poppe. "To have a repeat of last year would be virtually impossible."

Still, Poppe described farmers this spring as "cautiously optimistic, with the world as it is."

Gene Peters, who farms southwest of Rochester, has seen too many changes in the agriculture picture to start popping champagne bottles.

"There are no guarantees when you go out and plant. It's by the grace of God that we get a crop at all," he said. "You can do all you can with fertilizers and all, but you can't make a single raindrop fall, and you can't prevent hail. Crop insurance can take the sting out, but it doesn't replace profitability."

Back in the black

While grain farmers benefited from rising prices for corn and soybeans last fall, livestock producers felt the other end as they tried to stay afloat after a nasty 2009.

However, according to the data released Thursday, hog farmers made a comeback in 2010, earning a median income of more than $250,000, compared to a loss of $73,000 in 2009.

University of Minnesota Extension economist Dale Nordquist called the hog farmers' comeback the biggest change in the farm picture.

Dairy producers, too, made some comeback in profitability, although many still produced milk at break-even prices or at a loss, Nordquist said.

The median dairy farm made a net income of $57,853 in 2010, compared to just more than $2,000 in 2009.

Beef farms improved, with the median beef producer generating a net income of $34,451, compared to a net loss of $13,138 in 2009.