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Fixed farm expenses finally turning lower

Data from the Kansas Farm Management Association shows fixed farm expenses are finally starting to decline.

Purdue University’s David Widmar says fixed expenses, like depreciation, family living, and machinery, account for nearly 60 percent of a farmer’s budget and they’ve been the slow to drop.  “Depreciation is the carry-over from last year’s decision,” he says.  “If you were to buy a combine in 2013 or 2014 when that farm income was pretty strong, you’re still carrying over that depreciation and we’re still seeing that work its way through.”

He tells Brownfield farmers were quick to make adjustments to their variable costs, but reducing expenses, like family living costs became more of an emotional struggle.  “We saw family living costs increasing for several years during the farm boon in 2010, 2011, and 2012.  These take quite of bit of time to adjust and it’s an emotionally difficult one to move.”

Widmar says farm machinery expenses were down 9 percent from 2015.

He says as they look at production costs for 2017, he anticipates fixed expenses declining again this year.

AUDIO: David Widmar, Purdue Ag Economist