Farmers and ranchers across the country have seen one thing in common: increased input costs. Farm production expenditures reached a record-high $318.7 billion in 2011, a 10.2 percent increase over 2010, according to the Farm Production Expenditures 2011 summary released August 8 by the U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS).
Farm and ranch production expenditures for Nebraska totaled $17.32 billion in 2011, up 10 percent from a year earlier, according to USDA’s NASS, Nebraska Field Office.
“From last year, feed prices have gone up a lot. Couple that with the drought now, and hay has more than doubled, and that’s if you can find it. Cattle prices have dropped some as well. As more cattle come into the market and we cull deeper into the herds, that will depress the cow market even more. Margins will be pretty tight,” sad Dennis Bauer, UNL Extension Educator for Brown, Keyapaha and Rock counties.
Livestock expenses, the largest expenditure category, at $3.58 billion, remained unchanged from 2010. Livestock expenses accounted for 21 percent of Nebraska’s total production expenditures.
Rent, the next largest total expense category, at $2.08 billion, increased 8 percent from 2010. Rent accounts for 12 percent of the production expenses in Nebraska. The categories showing the largest percentage increase over the previous year are tractors and self-propelled machinery at 44 percent, and fertilizer at 33 percent.
On a per farm and ranch basis, the total expenditures per operation in Nebraska averaged $370,085 in 2011, up from $333,475 in 2010, which is an increase of 11 percent. Nationally, average production expenditures per farm were $146,653 in 2011, an increase of 11.3 percent over the previous year.
The livestock expense category, at $76,496 per operation, more than five times the national average. “The problem that we have is there is no feed available. Last year the South had a drought, but we had a really good growing season and so we had plenty of feed. This year I don’t know where you go to get feed. Distillers grains were cheap compared to this year. Everyone is in the same boat. There is a mad scramble for feed supplies, and that increases the price,” Bauer said.
Rent expenditures, at $44,444 per operation, were over three times the national average. “Pasture rents went up last spring, and now we are short of pasture. There sure won’t be much regrowth unless it starts to rain a lot more,” he said.
The average feed expenditure, at $36,966, was one and one half times the national average. Farm services expenditures per operation, at $33,120, were above the national average.
Nearly a third of all 2011 farm production expenditures occurred in the Midwest region, where farmers reported spending a total of $98.7 billion. Expenditures in the other regions were as follows: $73.8 billion in the Plains region, $69.8 billion in the West region, $39.1 billion in the Atlantic region, and $38.2 billion in the South region. Among states, Nebraska accounted for $17.3 billion in total farm production expenditures, which is part of the Plains region.
Bauer expects those costs will be much higher next year because of the issues that producers are facing. “What I would hope would happen is our irrigated corn farmers and even some dryland farmers would consider if they are going to bail up corn stalks, is that contact their local extension office and hook up with cattle producers to let them winter their cattle on corn stalks or in a drylot. We are all in the same boat here and I hope those things will happen,” Bauer said.
He continued, “Going forward, if producers can hang on to as many cows as possible as more cows are slaughtered because of the drought, the demand and the market for beef will be really good. They will be in the drivers seat a year from now. To get from here to next year, though, and have enough feed, will be a challenge.”
At the national level, as in prior years, fuel costs accounted for a significant portion of farm production expenditures, with farm operations spending more than $15.3 billion on it in 2011. Diesel fuel made up nearly two-third of all fuel expenditures, with farmers spending more than $10 billion on this fuel type in 2011, a 23.7 percent increase from 2010. They spent $2.8 billion on gasoline, $1.6 billion on liquefied petroleum gas and $820 million on other fuel in 2011.
“These higher inputs are going to have a negative effect on producers,” Bauer said. ❖