Farm Horizons, August 2009

Where does the money go?

By Myron Oftedahl
Farm Business Management Instructor
South Central College

The numbers are now final for the 2008 Farm Business Management Analysis, and the average farm of the South Central and Southwestern Regions had a total spending within the community or service area of $770,591.

This average farm owns 187 crop acres and cash rents an additional 494 acres. The rented acres incurred an expense of $71,952 for rent expense. This average farmer also spent $47,942 for custom work and other livestock work.

Crop production expense accounted for $167,042, with livestock production expense adding $138,896 to the total.

In order to operate the machinery, the average farmer spent $62,737 for fuel and repair expenses. Add in $16,268 for other and miscellaneous expense, and you have a total of $384,943 spent within the agribusiness community. Along with those direct costs, this farmer also spent $66,822 for farm machinery.

As do most farmers, our average farmer paid the lender $49,241 for interest or lease costs. The utility bill came to $7,684, and then the farm needed some extra labor. The cost for hired labor was $21,784.

The farm’s investment into buildings, land, and land improvements was $ 26,384. The family living expense was $89,147, which includes income taxes, home mortgage, IRA or SEP accounts, plus the day-to-day expense of the household. Last of all is another $4,692 spent with local government.

Obviously, everyone’s costs will be different, but compare your numbers to these. Divide the total expense by the acres to see how your operation compares.

In this case, the farm’s cost for crop production expense would be $245.29 per acre. This would include seed, fertilizer, chemical, and drying cost.

Use this as a benchmark, and then track your history and set a goal for the next year.

If you have questions, ask your local Farm Business Management Instructor.

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