Several states provide farm financial summary data each year. The information available varies by state and the following is an updated summary of what states include farm family living expense data. The original source of this information can be found in the February 2017 Ag Decision Maker newsletter article, Why have farm family living expenses been identified as a problem?.
Iowa Farm Business Association (IFBA)
Iowa State University Extension and Outreach reports summarized Iowa Farm Business Association data in AgDM File C1-10, Farm Costs and Returns. However, family living expenses are no longer broken into a unique category in revisions dated after 2009.
Illinois Farm Business Farm Management Association (Illinois FBFM)
The Illinois FBFM uses the Owner Withdrawal approach. FarmDocDaily’s When Creating 2021 Budgets, Keep In Mind Family Living Costs include a summary separating family living expendables, capital purchases for family living, and income and social security tax payments. The 2019 averages were $78,894 for noncapital, $5,446 for capital items “such as the personal share of the family automobile, furniture, and household equipment,” and $24,525 for income and social security taxes. The 2017 averages were $79,798 for noncapital, $5,744 for capital items “such as the personal share of the family automobile, furniture, and household equipment,” and $28,435 for income and social security taxes. The totals are useful, but the single category of noncapital does not provide much detail on categories of spending.
Farm and Family Living Income and Expenditures reports high and low third costs of living for a family of three to five in 2019 on the final page. Expendables is expanded to four categories. The categories are Contributions, Medical, Insurance (life and disability), and Expendables. Summing the noncapital and capital living expenses, the low third had a total cost of living of $57,337 and the high third was more than twice as much at $143,785 before income and social security taxes.
In this report, three categories are added. The same categories are used in the full report. Twenty-three percent of the 5,500 Illinois FBFM members provide the information necessary to report Owner Withdrawals with the additional detail.
Kansas Farm Management Association (KFMA)
Thirty-seven percent, of the 898 KFMA members analyzed, reported family living expenditures in 17 categories. Figure 2 gives the family living expense categories from that report and provides a visual realization of the changes in expenditure for the nine largest categories. A farm family looking at the graph may be able to think about changes in their own expenditures, and areas where costs could be cut. Home repairs, contributions, recreation, and household all increased dramatically beginning in 2006 through 2014, and have declined or remained steady since. Total family living expenses have remained fairly flat since 2015, with an average change of just 0.3% over the past 6 years. Large increases in the category of health insurance have been off-set by declines in categories such as home repairs and recreation (categories also strongly impacted by COVID-19 in 2020).
In An Analysis of Family Living Expense Categories, the correlation between net farm income and family living expenses is explored. Greg Ibendahl writes, “Family living is correlated to net farm income (correlation 0.62) but it appears to have a lag as the jump in family living expenses happened after the jump in net farm income. In publication GI-2016.7, we hypothesized family living was based on a four- year average of net farm income. Also, while net farm income in 2015 declined to near zero, family living is only starting to show a decline. Although total family living expenses declined slightly… some expense categories showed steeper declines…home repairs, contributions, medical, gifts and auto all showed declines in 2015.” This hypothesis is supported by the flat total family living expenses from 2015 to 2020 while net income rose substantially (26% average increase each year).
Southwest Minnesota Farm Business Association, Missouri Farm Business Management Association, and Nebraska Farm Business Incorporated
The Minnesota, Missouri, and Nebraska associations use the same family living expense categories. Page 22 of the Southwestern Minnesota Farm Business Management Association Annual Report and page 15 of the Missouri Farm Business Management Analysis Record Summary show the allocation of Owner Withdrawals. Nine percent of the 109 Missouri FBMA members reported family living expenditures in detail and 32% of the 108 Southwest Minnesota FBMA members reported family living expenditures in detail.
The 28 categories used by the Minnesota, Missouri, and Nebraska associations may be a sweet spot between the 17 categories used by the Kansas Farm Management Association, and the 103 categories used by the Bureau of Labor Statistics (Table 1). If the Kansas Farm Management Association categories are used, be sure to add personal taxes, purchases of personal assets, and other non-business expenditures to get to the total Owner Withdrawals.
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