Extension and Ag Research News


N.D. Farm Household Expenditures Flat in 2009

""The leveling of family living expenditures makes sense,” says Andy Swenson, NDSU farm management specialist.

The average living expenditures of $57,355 for North Dakota farm households in 2009 was approximately $50 less than in 2008. These numbers are based on 251 farms enrolled in the North Dakota Farm Business Management Education Program that kept detailed living expense records throughout the year.

“The leveling of family living expenditures makes sense,” says Andy Swenson, North Dakota State University farm management specialist. “Expenditures in 2007 and 2008 shot up by an annual average increase of 10 percent. During this two-year period, net farm income set record highs. In 2009, net farm income dropped by half and household expenditures settled down.”

When times are good, people are more likely to purchase vehicles, update and remodel the house and be more charitable. In 2007 and 2008, the largest percentage increase by expense category was for vehicle operation and purchase. It was up more than 25 percent for each year. The two categories with the next highest percentage increases were shelter, supplies and furnishings as a category, and gifts and giving. Most of the increase in expenditures during this period was due to more purchasing, not inflation. The U.S. consumer price index increased 2.8 percent in 2007 and 3.8 percent in 2008.

In 2009, net farm income dropped and most of the updating of vehicles and home furnishings probably was accomplished the previous two years. The expense categories of vehicle operation and purchases declined by 17 percent to $6,927. Shelter, supplies and furnishings declined 8 percent to $8,381, compared with 2008. All other expenditures increased or were relatively flat.

“The largest expenditure since 2001 has been for medical care and health insurance,” Swenson says. “In 2009, it increased 6 percent to $9,974. The second largest spending category was personal purchases and recreation at $8,679, which was up 3 percent. The fourth largest expenditure was for food, which was up 1.5 percent at $7,654.”

Contributions and gifts did continue to go up in 2009, posting a 14 percent increase to $3,689. Expenditures for life, disability and long-term care insurance increased 17 percent to $2,065 but was only 4 percent of total farm family living expenses. Nonfarm interest, the smallest expenditure category, was $1,249, but had the highest percent increase.

In 2009, expenditures for education averaged $1,718, clothing $1,984, utilities $2,779 and other family living expenses $2,259.

The U.S. Consumer Price Index (CPI) measures the general change in the price of goods and services (www.bls.gov). The change in the annual CPI was minus 0.1 percent from 2008 to 2009. Expenditure data from the North Dakota Farm Business Management Education program is the result of both prices and the quantity purchased. Therefore, it is somewhat coincidental that the change in average farm family living expenditures in 2009 also was minus 0.1 percent.

NDSU Agriculture Communication

Source:Andy Swenson, (701) 231-7379, andrew.swenson@ndsu.edu
Editor:Rich Mattern, (701) 231-6136, richard.mattern@ndsu.edu
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