Farm Horizons • Aug. 8, 2016 • Page 12 Farming’ s role in economics
How often have we heard that Main Street goes the way of farming? That agriculture has a trickle-down effect on Main Street business? Well, let’ s take a look at what effect an average farm has on Main Street and the rest of the community.
According to the information from the 2015 analysis of the Farm Business Management Program, the average farm spent $ 960,262 in the greater community. The average farmer in this data group was 47.8 years old and farmed an average of 683 acres. This is about seven years younger than the USDA average age.
This average farm covers both grain and livestock operations, so will look different than many farms. Let’ s take a look at some specifics; the average farm spent $ 157,532 on seed, fertilizer, and chemical on their crop acres. This equals $ 230.65 per acre for seed, fertilizer, and chemical. Another $ 28,620 was spent on other crop expenses, such as crop insurance and drying grain.
Purchased feed expense was $ 101,444, with another $ 40,248 being spent on veterinary, marketing and advertising, trucking, cleaning supplies, etc. These livestock operations could include dairy, hogs, or other livestock.
Machinery costs for fuel and repairs amount to $ 67,040. Custom work and feeder livestock expenses of $ 73,107 round out the machinery expenses. General farm expenses would include farm insurance, and other miscellaneous expenses. Labor costs of $ 40,094 for both part-time and full-time labor were a part of the expenses on our average farm.
Interest and leases account for a large percentage of the total, and amount to $ 162,720. With an average land rent of about $ 230 per acre, this totals $ 111,090, with $ 51,630 being spent on interest for money borrowed to operate the farm, purchase machinery, buildings, and land, in order to improve the farming operation. This investment into the farm business was $ 139,264 for 2015. This farm paid $ 20,513 for real estate taxes and utilities.
This leaves $ 96,497 for family living. Now, you are saying that this is a very high income compared to mine, but out of this total, income taxes of about $ 20,000 must be paid. Unlike many of us who receive paychecks, the farm pays all of the medical insurance costs, which typically are $ 12,000 to $ 15,000 for the family. Life, dental, disability,
Myron Oftedahl Farm Business Management Instructor, South Central College
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