By Jamie Martin
According to an analysis by Michael Langemeier of Purdue University's Center for Commercial Agriculture, crop and livestock farms have achieved similar long-term financial returns despite significant shifts in global grain markets.
Using commodity price data and farm records from 2007 through 2025, researchers compared returns among beef, dairy, diversified, and crop farms. The results revealed that all four farm types achieved average annual rates of return within a narrow range.
Commodity markets experienced several periods of divergence. Crop prices were stronger during some years, while livestock prices gained an advantage over others. Most recently, livestock commodity prices exceeded crop prices by a significant margin.
Even with these differences, farm returns remained relatively stable. Average annual returns ranged from just over 8% to slightly above 9%, demonstrating strong performance across the agricultural sector.
The study found that retained earnings played a key role in building farm wealth. More than 60% of net worth growth came from earnings kept within the business, highlighting the importance of profitability and reinvestment.
Financial efficiency varies among sectors. Diversified farms and crop farms generally achieved stronger income margins. Beef farms retained a larger share of their earnings, while dairy farms retained less income because of higher operating demands.
Researchers also noted that diversified farms and beef operations showed lower year-to-year volatility. This suggests that a broader mix of income sources can help reduce risk and improve financial stability.
While market conditions changed considerably between 2007 and 2025, the analysis found no evidence that the shift in grain markets consistently favored either crop farms or livestock farms.
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