Minnesota farmers face mounting expenses even before planting begins
MINNEAPOLIS -- You hear a lot about the high cost of rent in the Twin Cities, but in rural Minnesota it can be a struggle as well. Especially for the next generation of farmers looking for land.
Even with snow in the forecast, farmers plan to be in their fields in about a month. But they'll begin their planting season with more expenses than ever before.
"Equipment, capital, parts, labor, all of those things are extraordinarily expensive. Probably two to three times more expensive than they were even four to five years ago," said Dave Pfarr, agronomist and farmer near Le Sueur.
That includes the cost of land. It's estimated that about 60% of Minnesota farmers have a rental agreement to farm.
"Two years ago land values went up about 25% and last year another 18%," said Kent Thiesse, a farm management analyst and senior vice president for Minn Star Bank in Lake Crystal. "Especially now when interest rates have gone up. It does make it difficult for beginning farmers."
The competitive land market has actually attracted big names to the Midwest. A couple months ago, Cincinnati Bengals quarterback Joe Burrow joined other NFL and NBA players in buying about 100 acres of farmland in Iowa.
"I think land is always viewed as a safe investment as the economy has been on a little more shaky ground," said Thiesse.
But Thiesse doesn't anticipate a lot of pro athletes investing in tillable Minnesota farmland, and he doesn't expect the high land costs to impact food prices for consumers. Instead, he believes those costs will affect the bottom line for farmers.
Thiesse says younger people hoping to buy farmland should look at low interest loans through the USDA and other rural programs.
"Certainly there have been a lot of land sales in southern Minnesota over the past year that have topped $10,000 an acre, some as high as $15,000," said Thiesse. "The margins have gotten a lot tighter for farmers in 2023 for crop production."
Thiesse said the the majority of farmland buyers and investors are local, because Minnesota does have restrictions on foreign investors.