The numbers are in, and USDA says it cost you 5.3% more to operate your farm in 2005, than it did the prior year. That is probably no surprise, because you are thinking about fuel and fertilizer. But there is a lot more to the numbers, which may help your future budget preparation. Since the 75 page USDA report is a bit tedious to digest, please skim through the farm gate summary.

Initially, if someone challenges agriculture’s contribution to the US economy, slap them silly with the fact that farmers spent $223.1 billion in 2005 to produce crops and livestock, compared to $211 billion in 2004. In the Midwest, our expenditures were $63.6 billion, up 5.4% compared to 2004.

What went up in cost?
Fuels up 26.3%
Taxes up 14.3%
Fertilizer, Lime, and Soil Conditioners up 12.3%
Livestock and Poultry Purchases up 11.5%
Farm Services up 9.7%
Interest up 9.0%

What went down in cost?
Feed was down 5.1%
Other farm Machinery was down 4.7%
Tractors and Self-propelled Machinery was down 2.3%
Trucks and Autos were down 2.1%

How close are you to the average, if you are a Midwestern farmer?
Total expenditures--$104,124
Livestock, poultry & related--$7,920
Feed--$10,931
Farm Services--$11,504
Rent--$12,387
Chemicals--$4,696
Fertilizer--$7,986
Interest--$5,286
Real estate & property taxes--$4,418
Labor--$5,793
Fuel--$4,549
Supplies & repairs--$5,858
Improvements & construction--$6,136
Tractors--$5,155
Other farm machinery--$2,716
Seed--$6,709
Trucks & autos--$1,767

What has been the change in total outlay for production expenditures from 2001 to 2005 across the Midwest?
Total expenditures—up 11%
Livestock, poultry & related—up 10%
Feed—up 6.5%
Farm Services—up 10.3%
Rent—up .5%
Chemicals—down 7%
Fertilizer—up 19.8%
Interest—down 9%
Real estate & property taxes—up 5.9%
Labor—up 6.5%
Fuel—up 35%
Supplies & repairs—down 2%
Improvements & construction—up 42%
Tractors—up 31%
Other farm machinery—up 19%
Seed—up 17.3%
Trucks & autos—down 6%

USDA says, "A sample survey of approximately 34,200 farms and ranches was contacted January through April of 2006 in all states except Alaska and Hawaii. The survey covers the population of farms in the 48 contiguous states that meet the official USDA definition (all establishments which sold or would normally have sold at least $1,000 of agricultural products during the previous year). These operations include not only traditional agricultural farms such as grain farms and ranching operations, but also specialty farms such as orchards, nurseries, and those producing fish in captivity."

The entire report is available and contains regional breakdowns and averages, but also production cost averages for selected states, as well as the five year trend for production costs.

Summary:
USDA’s annual survey of production costs shows most farm input costs going up, but several declined between 2004 and 2005. The trends are interesting to see, yes, but if you are developing budget projections for 2007, the budget trends can be a significant help in creating a budget for your operation. Averages for expense items are also provided, to indicate how your farm compares to an average sized operation.