The average living expenditures for North Dakota farm households was $75,380 in 2014, which was essentially the same as in 2013 but much higher than a decade ago. In 2005, the average for family living expenditures was $45,411.

The expenditures are based on data from more than 200 farms enrolled in the North Dakota Farm Business Management Education Program, which kept detailed living expense records throughout the year. This figure does not include income or self-employment taxes. The average family size of farms reporting family living expenses was three people per household.

“Changes in family living expenditures from year to year are determined by changes in prices and changes in the level and types of items that are purchased,” says Andrew Swenson, North Dakota State University Extension Service farm and family resource management specialist. Farm family living expenses increased more rapidly than the inflation rate from 2007 to 2012, during a period of strong crop prices and farm income.

The U.S. Consumer Price Index (CPI) measures the general change in the price of goods and services (http://www.bls.gov). The average annual CPI increased 1.6 percent from 2013 to 2014 following a 1.5 percent increase from 2012 to 2013. The average annual increase in the CPI during the past 10 years, 2005-2014, was 2.3 percent.

“The largest expenditure category in 2014 was medical care and health insurance, $13,559,” Swenson says. “Almost tied for the largest spending category was personal purchases and recreation, $13,294, which has doubled since 2005. Shelter, supplies and furnishings was $11,673. The fourth largest expenditure was $9,261 for food.”

The nonfarm vehicle operation and purchases category was the fifth largest expenditure, at $7,725. Also in 2014, expenditures for contributions and gifts averaged $4,569, utilities $4,165, life and other personal insurance $2,800, clothing $2,372, education $1,572, nonfarm interest expense $1,435 and the “other” category at $2,955.

“Family living expenses are an important item in determining annual change in net worth and have increased substantially through time,” Swenson says. “For example, expenditures 20 years ago were $28,402. Family living expenses can be considered a fixed, or overhead, cost to the farm. There is pressure on farm families to increase revenue through time, either from farm or nonfarm income, to keep pace with family living expenses.”

NDSU Agriculture Communication - June 15, 2015