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Family Living Cost Is Skyrocketing


If you have followed this column over the years, you know I annually update you on the average farm family living cost. My good friends at the Nebraskaland Farm and Ranch Management Education Program have just released the data for 2010 on approximately 50 farms and ranches.

Family living cost before income taxes has skyrocketed! The current data finds that the average farm family living cost for a family of 3.3 people in 2010 is $79,250, compared to $65,213 in 2009, $66,126 in 2008, and $33,749 back in 2001. The average farm family living cost has more than doubled in the past decade.

Examining specific components of the personal budget finds that miscellaneous cost has doubled, illustrating that much of living cost may be leakage in the budget. Medical expenses, including health insurance, have become a bigger component, nearly tripling since 2001. Why? Healthcare insurance premiums are doubling every six years. Higher deductibles on coverage resulting in out-of-pocket payments are being discussed by many producers who attend conferences where I present. This is a nationwide issue that appears to have no resolution politically.

The amount of personal interest has seen a large increase, nearly tripling since 2001. This indicates more families are utilizing credit cards for personal expenditures. It is not unusual to observe $20,000-40,000 of credit card debt on farm and ranch balance sheets. This often comes with high interest rates and unattractive payback terms.

More taxes

When Social Security and income taxes are added in, the average drain from the cash flow is above $100,000 for the first time ever, more specifically $109,309. Income tax and Social Security payments have tripled on these budgets since 2001 also, which is indicative of higher profit levels, which result in higher taxes.

Historical References

While family living withdrawals are nearing $80,000 annually, in 1986 they were $20,000; and in 1967 they were $4,000. Wow! Time is not on our side in family living!


Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at

TAGS: Management
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