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Showing posts from April, 2016

Strategies for managing your farm's profitability

By Betty Berning, Extension Educator

One of the most common questions I receive from dairy farmers is, “What is the price of milk going to do?”  A close runner-up is, “What should I do given the current milk price?”  Finally, in times like this, the question is often, “When will it get better?”

There are no easy answers to any of these questions.  I always joke that I don’t have a crystal ball and I am not omniscient.  And while the price of milk certainly matters, which is revenue, so does a farmer’s cost of production, or expenses.  

First, I’d like to address the question of “What is the price of milk going to do?”  Two things establish a price: supply and demand.  Simply put, if I supply the market with more product than it is demanding, prices fall.  If I produce less than the market demands, my price increases.  Supply and demand are dynamic, which means they can change.  For example, if dairy exports increase, this causes demand for dairy to increase.  Similarly, if there is poor …

Trends in Farmland Rental Rates

By David Bau, Extension Educator

Recently I attended a meeting discussing the results of Southwest Minnesota Adult Farm Management in 2015. The numbers indicated the declining profits even with excellent yields in 2015. The group of farmers average rents declined by 6.7% from 2014 to 2015. Rents declined from an average of $239 in 2014 to an average of $223 in 2015. The compares to USDA rent figures published in September 2015 by the Minnesota Agricultural Statistic Service stating Minnesota statewide average rent declined by 2.7 percent from $185 in 2014 to $180 in 2015.

So what will happen with rents in 2016? The trend should again be down with both corn and soybean prices continuing to be lower than the previous year as indicated on chart below. Average prices for corn and soybean in Worthington, Minnesota for 2006 through 2015 are listed along with the first three months for 2016. This compared to the average rents for 14 counties in SW Minnesota including Brown, Cottonwood, Jacks…