Estimates of farm production expenditures by farm category, type

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Each August USDA’s National Agricultural Statistics Service (NASS) puts out an annual report on farm production expenses by farm type, by annual gross sales and by region of the country.

The most recent report shows expenditures in the U.S. hit $351.8 billion for 2012, up 10.4 percent from $318.7 billion in 2011. All expenditure items except interest increased from the previous year.

For an added perspective, it was 2008 that the year crop prices were launched into orbit and what we call a “new era” for prices not seen since the big pop in prices in the early 1970s occurred. For the four-year time span, just three categories show declines: interest, fuel, farm improvements and new construction.

The data show the breakout between farms where the primary activity is raising cash crops and those where the primary source of revenue are livestock sales.

That breakout readily shows that for primarily crop farms, 2012 expenses relating to livestock, and feed totaled only 4.4 percent of total expenditures whereas for farms that NASS categorizes as “livestock” farms, livestock and feed expenses accounted for 54 percent of total 2012 farm expenditures.

Total expenses have risen much faster for crop farms than for livestock farms. For 2012, expenses rose 17.4 percent for crop farms but just 2.4 percent for livestock farms. And since 2008, total expenses have risen 20.3 percent for crop farms and less than 8 percent for livestock farms. And there are quite a few more breakouts that have declined from both 2012 and 2008 for livestock farms vs. crop farms.

Another dichotomy between crop and livestock farms is in land rent and machinery expenditures. For crop farms, rent jumped another 13.1 percent in 2012 and is up 32.9 percent since 2008 while for livestock farms, land rents actually declined some in 2012 and are up just 14.2 percent since 2008. That stems from two driving factors: declining pro_ tability in livestock production and the fact that livestock farms are more likely to have less productive soils, more pasture, land tied up by building sites, feedlots, etc.

Divergence in machinery spending is the most dramatic between crop farms and livestock farms. The 2012 machinery expenditures on crop farms were 50 percent to 60 percent higher than in 2008, while spending on the two machinery-related items on livestock farms in 2012 was up 15.9 percent and down 1.9 percent, respectively.

The economic sales class contributing most to the 2012 farm expenditures was farms with gross annual sales in the $1 million to $4.999 million range. At $116.8 billion, these “megafarms” accounted for 33.2 percent of the United States total, up from 27.5 percent of 2011 total expenditures. It is followed by the “$5 million and over” class with $71.6 billion, up from $58.3 billion in 2011.

Regionally, the Midwest contributed the most to total expenditures with expenses of $112.0 billion (31.8 percent), up from $98.8 billion in 2011. The other regions ranked by total expenditures are: Plains at $88.8 billion (25.2 percent), West at $69.9 billion (19.8 percent), Atlantic at $42.6 billion (12.1 percent), and South at $38.6 billion (11.0 percent).

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