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Farm
living expenses
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[JUNE 6, 2005]
URBANA --
Living expenses rose $5,641 on average from 2003 to 2004 for 1,225
Illinois farm families monitored in a University of Illinois
Extension study. Total living expenses averaged $58,549 in 2004,
compared with $52,908 the year before.
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The families studied are enrolled in the Illinois Farm Business
Farm Management Association and are mainly grain farmers in
central and northern Illinois. The figure includes both capital
living expenses -- automobiles, furniture, and household equipment
-- and non-capital living expenses. "Income and Social Security
tax payments increased in 2004 compared to the year before," said
Dale Lattz, U of I Extension farm management specialist who led
the study. "The amount of income taxes paid in 2004 averaged
$8,208, compared to $7,571 in 2003. The amount of income taxes
paid was at its second-lowest level since 1989.
"Medical expenses were higher in 2004 compared to 2003. In
2004, medical expenses averaged $7,320. This is the first year
medical expenses averaged over $7,000."
While expenses were rising for the sample farm families, net
farm income was also up.
"In this sample, 2004 net farm income was $93,704, an increase
of $27,414 over 2003," said Lattz. "Record-high corn and soybean
yields were the main reason for the increase in net farm incomes.
"Net nonfarm income averaged $27,280 -- $1,361 higher than in
2003 and the highest amount this figure has ever averaged. Net
nonfarm income was 23 percent of total household income."
The operators of the 1,225 farms studied averaged 51 years of
age. Families averaged 3.2 members, with the age of the oldest
dependent child being 17 years, Lattz noted.
Lattz said the changing agricultural economy continues to
demand better record-keeping by farm operators.
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"Farm operations continue to grow in size," he said. "As these
operations expand, more funds are flowing in and out of the
business. More lenders are requiring cash-flow projections and
continual monitoring of these projections. Therefore, it is
important that more farmers learn how to balance and monitor their
cash flow each month."
Lattz said the data produced by the study could serve as a guide
for farm families budgeting allowances for family living expenses.
"For families in this sample, the family living expenses averaged
$84 for each tillable operator acre farmed," he said. "Operator
acres are the number of acres the operators receives revenue from.
If the net nonfarm income of $39 per tillable operator acre is used
for living, $45 per tillable operator acre would have to be
generated from the farm business to meet family living requirements.
In 2003, $40 per tillable operator acre was needed from the farm
business to meet family living requirements.
"Each family must determine how much each acre of crop or each
litter of hogs should contribute to their family living. This
amount, when added to production costs and other obligations, can
help to determine break-even prices needed for products sold."
The entire study can be read online on U of I Extension Farmdoc
site at
http://www.farmdoc.uiuc.edu/manage/
newsletters/fefo05_10/fefo05_10.html.
[News release from the
University of Illinois College
of Agricultural, Consumer and Environmental Sciences] |
