Are Fixed Farm Expenses Coming Down Yet?

 

Fixed Expenses coming down. Photo by Johnny Klemme

by David A. Widmar

As production agriculture in the U.S. transitions out of the boom-era, producers face a margin squeeze resulting from declining output prices and stubbornly high input costs. In most cases, producers are facing 2015 and 2016 crop production budgets with negative returns.

We are often asked when things on the farm will improve. In an earlier post and paper, we outlined that in the long-run it is likely that a combination of three scenarios will take place to stabilize farm profitability: 1. variable costs moderate through eventual reduction in farmer demand for inputs 2. Fixed costs decline through reduction in fixed assets demands and values, and/or 3) output price may improve.

In this post, we take a look at fixed costs from the most recent data (2014) provided by the USDA and Kansas Farm Management Association (KFMA). Keep in mind that net farm incomes across the country were lower in 2014, but still well above average.

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8 Trends Shaping the Future of Agriculture: The Census of Ag Facts Everyone Should Know

The recent release of the 2012 USDA Census of Agriculture provides a comprehensive picture of the U.S. farm sector.  There are many, many potential insights that can be gleaned from the data, but hundreds of pages of data can be a little overwhelming.

From the Census, we identify 8 key facts about the farm sector.  More details and discussion about these Census facts can be found in The AEI Report: “8 Trends Shaping the Future of Agriculture: The Census of Ag Facts You Should Know”, now available for free, click here.

For this post, an overview of the 8 Trends is below:

 

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