Farm income remains strong despite inflation, says Minneapolis Fed

A new survey from the Federal Reserve Bank of Minneapolis suggests strong farm incomes so far this year, even with the higher cost of inputs, like fertilizer.

An April survey of 54 banks found that 87% have seen an increase in farm incomes during the first quarter, said the Minneapolis Fed's regional outreach director, Joe Mahon, on Tuesday. The survey measured credit conditions in the January-March period across five states, including Minnesota, the Dakotas, Montana and northwest Wisconsin.

The news continues a strong financial streak, with Minnesota farmers posting near-record profits last year with median income of $166,000, according to the University of Minnesota Extension.

Farmers often temper enthusiasm about recent soaring corn and soybeans prices by noting any benefit is partly offset by the cost to get those crops in the ground.

"We did get a lot of comments about the increasing cost of business, of fertilizer, of fuel," said Mahon.

But, the analyst said, the high prices farmers can fetch for their row crops are "outpacing those input costs a bit, and that's leading to those higher incomes."

Regionally, corn prices have eased backed from a high of $8 a bushel last month. CHS in Savage reported this week paying $7.65 a bushel for July corn. CHS in Fairmont paid over $17 a bushel for July soybeans.

Overall, agricultural commodity prices resemble what Mahon called the "booming years" at the outset of the last decade. Average monthly corn prices, nationwide, hit a peak in 2013, at over $7 a bushel, according to USDA.

The April survey also noted land values for nonirrigated cropland rose across the Fed's Ninth District by 23%.

While the survey results do not fully absorb price pressures and supply challenges created by the war in Ukraine, lenders remain optimistic. Fully 70% of those surveyed predicted incomes will remain strong through the end of June.