One of the most difficult calculations farmers have to make doesn’t involve what’s growing in their fields, but what’s behind the front door. A recent report from Agricultural Economic Insights suggests that fixed expenses, particularly those involving family living, are among the most difficult to calculate and incorporate into farm budgets. AEI’s David Widmar says the first step most farmers should take is finding out what’s considered typical.
Widmar says average farm expense calculations at the state level, similar to those compiled by farm management associations from Illinois and Kansas, provide detailed information that can help guide the process. However, he notes that costs can vary widely between farm families.
David Widmar of Agricultural Economic Insights notes that the ultimate goal of the process is to identify the expenses and how they’re budgeted, not necessarily minimizing them. He adds that some categories, including saving for retirement or college, can help offset future expenses.