The Road Warrior of Agriculture
Several weeks ago I was in Pipestone, MN, for a two-day program for lenders and producers for Minnesota West Community and Technical College. The farm management adult education professionals do an excellent job of gathering financial data for summaries and analysis. The warm, 60-degree January weather led to some heated discussions by lenders.
Family Living Cost Wide Spectrum
Intense discussion concerning family living costs occurred in both the lender and producer meetings. Data gathered and summarized on approximately 800 farms finds a wide range, depending upon the profitability of the farm.
For example, total average family living cost was $33,247 for 2001. However, when income taxes, non-farm purchases, and savings and investments were included, it jumped to $51,169. It was interesting that non-farm savings and investments were about 5 percent of total expenses.
There was a general trend that as farms became more profitable their withdrawals increased. For example, the top 20 percent of profitable farms’ total family living cost increased slightly by $3,000. However, when income taxes and other expenses and savings were included, it increased to $79,000.
Granted, income taxes doubled for the average group as expected; however, non-farm capital purchases increased on average five times. Would this be due to killer toys, such as snowmobiles, four-wheelers, etc.? It was impressive that savings as a percent of total expenses was nearly 14 percent, which is a positive attribute.
It’s not how much you make, it’s how much you spend that is a key in wealth accumulation.
A surprising result was that savings in non-farm investments was higher than I expected.
There appears to be more federal security people in the airport than passengers! Hotels and planes are empty!
Back in Blacksburg
This week I’ll be hanging around Blacksburg, teaching classes and resting up before flying to Washington next week. My e-mail address is:firstname.lastname@example.org
Editors' note: Dave Kohl, Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He recently completed a sabbatical working with the Royal Bank of Canada. He is now back at Virginia Tech with his academic appointment, which is teaching, extension, and applied research.
To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.
This online exclusive is brought to you by Soybean Digest