Ag News
Farm production expenses up
Published Monday, October 13, 2008 at 07:38 AM
U.S. Farm Production Expenditures1 totaled $260 billion in 2007, up 9.3 percent from the revised 2006 total of $238 billion. The largest percentage contributors to the increase were Fertilizer, Lime, and Soil Conditioners, up 26 percent; Feed, up 21 percent; Fuels, up 14 percent; Agricultural Chemicals, up 11 percent; and Tractors and Self Propelled Equipment, up 11 percent. For the first year ever, the trend for all expense items was higher than the previous year, except for Miscellaneous Capital Expenses, which were unchanged. The top three average expenditures per farm with the largest dollar increase were: Feed up $3,335, or 22 percent; Fertilizer, Lime, and Soil Conditioners up $1,684, or 26 percent; and Farm Services up $1,210, or 7.9 percent. All other per farm average changes were less than $900 dollars per farm. Total Fuels Expense, at $12.7 billion dollars, was up 14 percent in 2007. Diesel, the largest sub-component, was $7.71 billion accounting for 61 percent of the Fuels Expense. Gasoline was $2.74 billion, up 16 percent. LP Gas was $1.5 billion, up 17 percent. Other Fuels was $750 million, up 4.2 percent. Fuel prices and weather were two large factors affecting farm production expenditures, during the year. One component affecting production expenditures in 2007 was increasing petroleum cost. This translated into rising fuel cost directly, as well as fertilizer products, chemicals and transportation costs. Indirectly, fuel prices and ethanol production have contributed to higher crop prices and increased feed costs. Frost damaged citrus in California, apples in Washington, and other crops in the Southeast. Spring and summer drought hindered production in the South, and continued throughout the Mid-Atlantic into the fall. Hot summer temperatures across the U.S. produced the sixth hottest summer on record. The four largest expenditures at the U.S. level totaled $125.1 billion and accounted for 48 percent of Total Farm Production Expenditures in 2007. They were Feed, 15 percent; Farm Services, 13 percent; Livestock & Poultry purchases, 10 percent; and Labor, 10 percent. In 2007, the average per farm U.S. Total Farm Expenditure was $125,648 compared with $114,186 an increase of 10 percent over 2006. On average, U.S. farm operations spent: $18,412 on Feed, $16,575 on Farm Services, $12,903 on Livestock and Poultry Purchases, $12,564 on Labor, $8,988 on Rent, and $8,070 on Fertilizer, Lime, and Soil Conditioners. Revised estimates for 2006 indicate U.S. farms spent an average of: $15,365 on Farm Services, $15,077 on Feed, $12,532 on Livestock and Poultry Purchases, $11,764 on Labor, and $8,787 on Rent. Average Total Expenditures for large farms ($1 million and over in sales) were $3.06 million, 4.3 times larger than the next largest economic class. The average Total Expenditure for a Crop farm was $151,978 compared with $106,742 per Livestock farm. Total Expenditures by Farm Production Expenditure Region13 were up for four of the five regions in 2007. The Plains had the highest increase at 16 percent, followed by the Midwest up 14 percent. The West remained almost steady with a slight decrease of 0.7 percent. The Midwest region contributed the most to U.S. Total Farm Production Expenditures with expenses of $74.4 billion or 29 percent up from $65.0 billion in 2006. The other regions ranked by Total Expenditures are: Plains at $64.3 billion (25 percent); West at $58.7 billion (23 percent); Atlantic at $32.3 billion (12 percent); and South at $30.2 billion (12 percent).2 The 2007 Agricultural Resource and Management Survey - Phase III (ARMS III) sample size was 31,924 with 18,709 usable reports, equaling a response rate of 59 percent. The sample size was increased in 2003, and estimates for the 15 Leading Cash Receipts States13 (Estimate States) were published for the first time in 2004. The sum of Total Expenditures for Estimate States was $168.3 billion in 2007 (65 percent of the U.S. total) and $152.5 billion in 2006 (64 percent). California contributed most to the 2007 U.S. Total Farm Expenditures, with expenses of $27.1 billion, or 10 percent of the US total expenditures. California expenditures were down 2.9 percent from the revised estimate of $27.9 billion in 2006. Texas, the next leading state, contributed 7.6 percent to the 2007 U.S. Total Farm Expenditures. Other states with more than $10 billion in Total Expenditures were: Iowa with $17.3 billion (2006 - $15.0 billion), Nebraska with $14.6 billion (2006 - $12.8 billion), Kansas with $12.4 billion (2006 - $10.3 billion), Minnesota with $11.8 billion (2006 - 10.4 billion), and Illinois with $11.4 billion (2006 - $10.1 billion). California and Washington were the only Estimate States to show a decline. The U.S. Economic Sales Class contributing most to the 2007 U.S. Farm Production Expenditures was the $1,000,000 and over class, with expenses of $114.2 billion, 44 percent of the U.S. total. Expenditures in the $1,000,000 and over class were up 20.2 percent from the 2006 level of $95.0 billion. It was followed by the $250,000 - $499,999 class with $34.7 billion (2006 - $33.3 billion) and the $500,000 - $999,999 class with $33.7 billion (2006 - $32.4 billion). The difference in Total Expenditures between Crop and Livestock Farms has narrowed over the past few years. In 2007, they remain almost equal, with Crop Farms at $131.4 billion and Livestock Farms at $128.6 billion. The largest expenditures for Crop Farms were Farm Services at $19.2 billion and Labor at $16.9 billion, accounting for 27 percent of their total expenses. Combined crop inputs (chemicals, fertilizer, and seed) were $32.9 billion, accounting for 25 percent of Crop Farms total expenses. The largest expenditures for Livestock Farms were Feed at $35.9 billion, accounting for 28 percent of total expenses, followed by Livestock and Poultry Purchases, at $24.3 billion accounting for 19 percent of total expenses. Together they accounted for 47 percent of Livestock Farms total expenses.
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