Farmers and ranchers cut their production costs by roughly nine percent last year. A report in Successful Farming said the cuts were caused by an end to the agricultural boom and a resulting collapse in farm income.
Farmers paid out a total of $362.8 billion last year, the lowest outlay since 2012 according to estimates from the USDA Farm Expenditures Report. The peak outlay for expenses was 2014, when farmers spent nearly $400 billion, just as commodity prices began a sharp decline. Average spending per farm last year was $171,000, down just over $15,000 from the previous year.
Crop farmers were aggressive in cost cutting, lowering expenditures by $22 billion dollars, or 11 percent from the previous year. The biggest cuts were in equipment, fuel, and farm repairs and supplies.
Rent was the biggest single expenditure and it dropped five percent from the previous year to $25.4 billion.
University of Illinois Grain Economist Gary Schnitkey says farmers should expect marginally lower revenues from corn and soybean this year, with another drop in revenues in 2017. He said farmers will need to continue to cut costs, especially if they have a low amount of working capital.