A couple weeks ago, I reported BEA data showing South Dakota’s farm earnings were down 57% in 2016. The Mitchell Tech-based Center for Farm/Ranch Management gathers similarly grim ag-econ data from farms enrolled in its program:
The average farm enrolled in the South Dakota Center for Farm/Ranch Management program experienced nearly a 66 percent decrease in net farm income in 2016, according to data compiled for analysis. The average net farm income in 2016 was $13,308 compared to the 2015 average of $38,898. The data is compiled through a statewide educational program that assists producers with their record keeping and management offered through Mitchell Technical Institute.
The numbers in this year’s report indicate another substantial drop following 2015’s 77 percent decrease from 2014.
“I’m a real numbers person rather than percentages. So in simpler terms, we’ve went from very prosperous in 2010-2012 (avg. $242,079), to somewhat prosperous in 2013-2014 (avg. $155,167) to just getting by in 2015, and now to being in need of substantial improvement to sustain the farm/ranch business’ future,” said Will Walter, program director of the Farm/Ranch Business Management Program at MTI [“2016 South Dakota Net Farm Income Shows Subsequent Annual Decline,” Watertown Public Opinion, 2017.04.11].
Interestingly, cash family living expenses for participating farms also decreased 13%, from $65,923 in 2015 to $57,169 in 2016. I suspect that doesn’t mean it got cheaper to care for a family on the farm; the family just found ways to get by with less. Farm families spending $8,800 less… multiply that by 31,000 farms, then by 4.5%…. that’s around $12 million less in sales tax. That could leave a dent in revenue projections.
Guess who then qualifies for Medicaid Expansion? Ag folks are gonna have to pull in their white power horns and get real to the changes going on around them. Ag folks are no friend of the right wing, they only see your vote, they could care less about your circumstances. Ag folks get sick and don’t take care of themselves because they fear the bill from the docs. They hope like hell they can make it to get Medicare and a supplement to finally take care of their pain and suffering. The simple solution to all of this is to demand better with your feet, vote change. Why put any of these same politicians saying the same old lies. Dump NOem! Dump Jackley! Dump Krebs! Find the solutions elsewhere or be destroyed with one simple sickness or one large machinery breakdown. Your way is not sustainable without real assistance, demand it.
China is going to change their policy on buying cattle and all of South Dakota’s ag problems disappear like smoke. Tired of all the winning, yet?
CH,
What makes up cash living expenses? The difference could be as simple as in good years they buy a new family car. May not be a change in lifestyle as the farmers in my family basically live pretty frugally and don’t change much between good and bad years as the “excess” in good years just gets put back into the farm.
Boy Troy, you really ought to read what you post. Anyone and I mean anyone can purchase a new family car, no big deal. Just go to the banker and sign your name, just like you do for any operating money. As noted by actual researchers, the family farm is bust and has been. As Blindman more or less said, if the banks start to get nervous and call in the notes, there is nothing to stop a foreclosure on many that lived even as frugally as your kinfolk.
If Medicaid comes into being block grants, you may well have the opportunity to buy your kin out at a fire sale if one or both of them needs care. Think of what your republican party hath wrought among us.
How many off the farm jobs are going to be needed to put chow on the table? How many miles of driving back and forth on some cow trails to go to the second or third part time job do you think it will take for the family truckster to just give out? There are no excesses and there have not been any for some time.
While the numbers sound bad, remember that farms are businesses and they get to expense out a whole lot of things you and I pay for with post-tax money before their net income is calculated.
There is one simple thing to consider here. The market prices for nearly everything a farmer sells has dropped by 50%,give or take a little, in the last two years. Cost of production has not gone down. You can talk about net versus gross income or what a farmer may or may not have purchased all day long and it doesn’t change the simple truth: a 50% reduction in prices spells only one thing- DISASTER.
I can remember the ag crisis of the 1980’s. Things were bad for both farmers and Main Street. Hope we don’t have a repeat of all that.
Our land taxes have doubled in last 8 years no fun paying when you’re going backwards
My family has been farming in South Dakota since my great grandfather homesteaded in 1869. My son who would like to farm most likely won’t be coming back and the only thing that is keeping us going is the fact my wife and I are both on social security. If you check a few other statistics you will find that most farmers are on social security. Well, all that is needed is to get bigger…right? More efficient…right? We’ve done all that and you reach a point where you no longer can keep up.
Those of you that think that all we need is some more “free trade” need to get your heads out of where ever you have had them stuck. We have lost 50% of the US farmers every decade since that ‘greatest of all’ republican presidents Ronny Reagan. And you wonder why every small South Dakota town is turning into a ghost town??
I read an article a while back that claimed that there were only 75,000 farmers left in the US that derived all their income from agriculture. Looking around me I can’t dispute that.
Want to get government out of agriculture??
Well, riding a tractor all day give’s a guy plenty of time to think and it appears to me that there are only two scenario’s that could come about. As long as you have the capacity to over produce you could only have subsistence farmer’s or all the production capacity owned by the 1% who then would control profitability. It looks like the second scenario is where we are headed.
@Caroline: “There is one simple thing to consider here. The market prices for nearly everything a farmer sells has dropped by 50%,give or take a little, in the last two years. Cost of production has not gone down.”
Really? Diesel fuel in 2014 was nearly $4 per gallon. Gas was around $3.5. Fertilizer prices are lower as well due to a glut of natural gas. Propane prices have also dropped from the peak in 2014 due to price drops in natural gas and oil.
Don Coyote: You obviously don’t farm. Fuel prices now days are a tiny share of our cost’s and I sure would like to know where all this cheap fertilizer is!?
Yes, you can expense out many things. That is not the issue when the income derived from the sales are less than the cost of putting the crop in the ground. So expense out as much as you want but the bottom line is still underwater. Ag folks maybe do not want to continue running the family farm like trump runs his casinos. In order to do that, you have to have offset monies. Like Clyde so accurately says, that is generally Social Security or one or both of the family farmers works in town at a second or third job to make ends meet a little.
Overproduction has killed the lands. We used to have soil banks and the land and the water were a source of habitat as well as a wind buffer. Now, trying everything they can do, they farm to dangerously close to watersheds that not only clean the water, but also provide habitat. The Farm Bill is a bust, simple as that.
Coyote, energy prices have fallen but has not changed the problem of very low profitability. Seed prices still creep higher along with herbicides and other inputs. If it was great in ag, why are those John Deere stores in 2 states consolidating and why is Titan closing several stores. If farming is profitable, farmers buy new iron. They are not spending money right now and it will take time for prices to recover.
Here is a farmer non farmer scenario. Or business owner vs.wage earner. Farmer lives in a house, pays property tax. Farmer buys land to operate. Farmer uses profit he has already paid fed income tax on to make payment(cost of the land is not deductable, the interest on the note is) farmer pays property tax on land. Farmer lives to retirement, wants to rent his land to support his retirement. Continues to pay property tax on land and income tax on rent. Farmer dies, family pays death tax.
Wage earner lives in a house pays property tax. Worker earns an income pays fed taxes. Worker lives to retirement. Retirement is supported by Ira’s and investments. If he would have been like the farmer and used after tax contributions ( roth ira) his retirement would mostly tax free. Worker dies, little chance his family pays inheratence.
My only point, in south dakota take an average farmer vs average wage earner, from cradle to the grave, who pays more taxes. So your arguement on deductions is BS.
In the 80s interest was 15 to 20% on inputs that were about 25%of what they are today.
Inputs today are 4 times that of the 80s but interest is 5%. Comes out to the same dollars.
To add some clarification to 1254’s comment that
That means the farmer’s estate was worth over $5.49 million dollars, unless the farmer was married. A married couple gets double that or about $11 million dollars before the “death tax” kicks in. Few workers accumulate such fortunes and 1254 is probably correct that about the worker – there really is “little chance his family pays inheratence.(sic)”