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Family Living Costs Gone Wild? Part 2


In the last article, discussion centered on farm family living cost trends based upon the family living data provided by Nebraska Farm Business, Inc. The average withdrawals now exceed $100,000, with over a $60,000 variation from the top third to the bottom third of producers in the database. The largest specific line item deviations from the high to low third are in cash donations, household supplies, recreation, repairs, life insurance and, yes, the “catch-all” miscellaneous category, which was two to five times greater for the group at the high end of the spectrum.

Let’s dig deeper below the line and examine other related nonfarm investments and capital expenditures. Yes, new prosperity has resulted in an increase in Social Security and income taxes. The average reported amount was $43,740, with the low third clocking in at nearly $22,000 and the high third with nearly $75,000. Interestingly enough, when examining savings and investment the average group stashed away nearly $17,000, compared to the low third at $6,325 and the high third at $11,264.

A major difference was seen in other capital purchases. The low one-third reported nearly zero while the average was $120,000, and the high one third showed approximately $330,000 of capital purchases. Do these amounts indicate the purchase of so-called killer toys, such as boats, travel trailers, helicopters, airplanes or other hobby equipment?  Breaking out the nonfarm real estate purchases finds that they are similar across the group, at approximately $25,000 to $35,000.

Other interesting information from the data series finds gifts and inheritances are approximately $19,000, with wages and salary, rental income and interest income averaging below $35,000. As net farm income has dramatically increased since 2009, family living expense and income taxes have followed a similar steep increase. Health insurance has risen dramatically while medical care expense has remained the same. Food and meal expense has nearly doubled since 2003.

Yes, family living cost demonstrates a large variation amongst producers and is becoming a major cash flow drain from some farm businesses. It will be interesting to see if and when farm incomes decline, whether family living costs and consumption patterns adjust. My gut feeling says no!


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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