Ag Producers Cut Expenses by Nine Percent

Dan General, Industry News Release

Dollar banknotes and wheat grains on wooden background. Agricultural income concept-expenses
Farmers and ranchers cut their production costs by roughly nine percent last year. A report in Successful Farming said the cuts were caused by an end to the agricultural boom and a resulting collapse in farm income. Farmers paid out a total of $362.8 billion last year, the lowest outlay since 2012 according to estimates from the USDA Farm Expenditures Report. The peak outlay for expenses was 2014, when farmers spent nearly $400 billion, just as commodity prices began a sharp decline. Average spending per farm last year was $171,000, down just over $15,000 from the previous year. Crop farmers were aggressive in cost cutting, lowering expenditures by $22 billion dollars, or 11 percent from the previous year. The biggest cuts were in equipment, fuel, and farm repairs and supplies. Rent was the biggest single expenditure and it dropped five percent from the previous year to $25.4 billion. University of Illinois Grain Economist Gary Schnitkey says farmers should expect marginally lower revenues from corn and soybean this year, with another drop in revenues in 2017. He said farmers will need to continue to cut costs, especially if they have a low amount of working capital.

From the National Association of Farm Broadcasting news service.

From: USDA National Agriculture Statistics Service

2015 United States Total Farm Production Expenditure Highlights

Farm Production Expenditures in the United States are estimated at $362.8 billion for 2015, down from $397.6 billion in 2014. The 2015 total farm production expenditures are down 8.8 percent compared with 2014 total farm production expenditures. All but two expenditure items decreased from the previous year.

The four largest expenditures at the United States level total $177.3 billion and account for 48.9 percent of total expenditures in 2015. These include feed, 16.1 percent, livestock, poultry and related expenses, 12.5 percent, farm services, 11.5 percent, and labor, 8.8 percent.

In 2015, the United States total farm expenditure average per farm is $176,181 down 8.0 percent from $191,500 in 2014. On average, United States farm operations spent $28,408 on feed, $22,047 on livestock, poultry and related expenses, $20,202 on farm services, and $15,443 on labor. For 2014, United States farms spent an average of $30,680 on feed, $21,818 on farm services, $21,722 on livestock, poultry and related expenses, and $16,472 on labor.

Total fuel expense is $12.3 billion. Diesel, the largest sub component, is $8.0 billion, accounting for 65.0 percent. Diesel expenditures are down 24.5 percent from the previous year. Gasoline is $2.3 billion, down 25.8 percent. LP gas is $1.4 billion, down 34.1 percent. Other fuel is $650 million, down 31.6 percent.

The United States economic sales class contributing most to the 2015 United States total expenditures is the $1,000,000 – $4,999,999 class, with expenses of $119.2 billion, 32.8 percent of the United States total, down 11.8 percent from the 2014 level of $135.1 billion. The next highest is the $5,000,000 and Over class with $81.3 billion, down from $102.0 billion in 2014.

In 2015, crop farms expenditures decreased to $180.3 billion, down 10.9 percent, while livestock farms expenditures decreased to $182.6 billion, down 6.6 percent. The largest expenditures for crop farms are rent at $25.4 billion (14.1 percent of total), farm services at $23.9 billion (13.3 percent), and labor at $22.6 billon (12.5 percent). Combined crop inputs (chemicals, fertilizers, and seeds) are $52.8 billion, accounting for 29.3 percent of crop farms total expenses. The largest expenditures for livestock farms are feed at $57.1 billion (31.3 percent of total), livestock, poultry and related expenses at $43.2 billion (23.7 percent), and farm services at $17.7 billion (9.7 percent). Together, these line items account for 64.7 percent of livestock farms total expenses. The average total expenditure for a crop farm is $189,710 compared to $164,591 per livestock farm.

Farm Production Expenditures