‘Northwest Kansas fared the worst’ in farm income study

K-State Research and Extension

MANHATTAN — Kansas farmers took a one-two punch with drought and lower grain prices in 2013 and the result was a drop in average net income to its lowest level since 2009, according to data from the Kansas Farm Management Association’s annual PROFITLINK Analysis.

winter wheat

Net income across 1,194 KFMA-member farms averaged $135,429 in 2013, down from $159,352 in 2012 and $166,375 in 2011. The figure is also below the five-year average of $145,096.

The biggest drop was primarily in western Kansas, which experienced the worst of the state’s drought conditions, said Gregg Ibendahl, Kansas State University associate professor of agricultural economics. However, the major grain-producing areas of the country did not experience drought and as a result U.S. grain production was good and this pushed down prices.

Not all Kansas farmers are members of the KFMA, but the annual report provides a glimpse of financial conditions for producers across the state, especially when comparing one year to the next.

The data showed that about 23 percent of the farms had net income of $200,000 or higher, while 42 percent had income of $50,000 to $200,000. Twenty-nine percent had net farm income of $0 to $50,000 and almost 14 percent operated at a loss.

“A big chunk of our farms are making $0 to $55,000 a year. Most people are not getting rich,” Ibendahl said.  “Even in the best years, the majority of farms make under $100,000.”

A tale of six regions

“Northwest Kansas fared the worst, partly because of the drought, but also because grain prices went down so much,” Ibendahl said. “All of a sudden the value of the grain inventory was down. Because the study considers net income on an accrual basis, the lower inventory was reflected in lower farm income.”

The average price of U.S. corn in 2013 was $4.50 a bushel, down from $6.89 in 2012, according to the U.S. Department of Agriculture. The average price of soybeans last year was $12.70 per bushel, down from $14.40 a bushel in 2012.

Net farm income numbers varied widely by regions across the state, with northwest Kansas averaging $35,791, southwest at $71,633 and southeast at $161,776. Income in north central Kansas averaged $136,045; south central at $151,303; and northeast at $154,867.

Dryland net farm income across 855 farms was $156,991, down from $169,061 a year earlier and about the same as $157,296 two years earlier.

Net income for the 59 farms that irrigate crops averaged $118,974, well below $347,315 in 2012 and $449,115 in 2011.

Yields on irrigated farms typically don’t vary that much, Ibendahl said, so last year’s lower grain prices and inventory values weighed them down.

“That will be a factor in this coming year,” he added. “With crops in some of the bigger producing states — Iowa, Illinois, Indiana and Ohio – we’re on track to have pretty good U.S. production next year. We were looking at pretty good grain prices for a few years but will probably be lower next year.”

Livestock a bright spot

Last year’s lower grain prices meant trouble for grain growers, but gave livestock producers a boost.

“Anything to do with livestock did pretty well, compared with the year before,” Ibendahl said, noting higher meat prices and lower grain prices. “Those in the cattle background feeding and finishing went way up. They had a really good year.”

The 2013 average net income for backgrounding-finishing operations was $162,459, well above $46,193 a year earlier, but below $397,138 two years earlier.

Net income for farms in the “Crop – Sow & Litter” category averaged $206,724, up from $166,809.

Overall, the report showed the average value of livestock produced in 2013 at $92,241, compared with $88,507 a year earlier and $106,280 two years earlier.

Family living expenses

Total family living expenses rose to an average of $71,377, up from $70,242 in 2012. Family living expenses have increased every year since the 2009 average of $54,981.

“If you look at our family living expenses and the fact that they were higher, even though net income fell, there’s a two- to three-year lag before families are able to make the adjustment after income has been up,” Ibendahl said. “When you have money, you’ll tend to spend more of it. With the potential for lower grain prices this coming year, farm families will need to monitor their family living to avoid eating into their net worth.”

  • summersg

    that’s ok. farmers will just belly ache to the federal government to get their subsidy checks raised. i vote we get rid of all subsidies.

    • Learn

      Have fun paying $20 for a gallon of milk and $15 for a loaf of bread! Those subsidies also help to regulate the cost of food. Do you even know how that system works or do you just hear someone complain about stuff and become a parrot?

      • Wildcat

        Oh, I know how it works… and it’s all greed. Two points… the taxpayer is paying higher prices regardless.. you do realize we pay the subsidies? Secondly, what farmers do to the environment is purely selfish greed… for example, Kansas sued CO for minimum streamflow in the Ark River during the late ’80s. KS won, and since then a nearly continuous flow of water 20yds wide and 3 feet deep passes by Coolidge only to be sucked dry by irrigation over the next 30-60 miles. Surface waters that supported a diverse array of wildlife prior to the early 20th century are now gone… for what? We don’t need the corn from there. It’s greed at the highest cost.

        • A_citizen_patriot

          Greed? HAHA, don’t know much about farming do you. There are very few in Ellis county that irrigate. Don’t lump all farmers into the same category. It shows ignorance on your part.

          • Wildcat

            That was just one example… and yes high plains irrigators are the worst. But one only has has to examine a Google Earth image from 200 miles above to begin seeing the expanse of monoculture and dry or dirty streams where a diverse flora and fauna around clean streams and running springs existed prior to the plow. I don’t profess to have a solution, but I’m willing to pay more taxes to keep ground out of production if that’s what it takes for farmers to become good stewards.

          • A_citizen_patriot

            I can tell you the solution. The farmers that irrigate out here need to go back to dry land farming. A lot of us do it and make it work.

        • Reality

          Good point. That corn goes to feed cattle. Horribly inefficient. Read “Power Steer,” a 2002 NY Times article on the beef industry, and how the aquifer gets pumped dry trying to support it.

        • A_citizen_patriot

          So the home you live in was built from greed. Since those forests are disappearing. Your clothing was made with greed, since they irrigate cotton. Your car runs on greed since fresh water is needed to drill Oil wells. Seems you support greed all the time.

      • A_citizen_patriot

        I farm for a living and I would vote to get rid of all subsidies. All subsidies are for is so a company can keep producing a product that it normally wouldn’t be able to afford to create and sell. If I open a pork only butcher shop in a 90% Jewish neighborhood should I get subsidies so I can keep selling meet to the 10% that are not Jewish? Since the stock market is what decides the price of beef, and wheat etc. I don’t see how subsidies really keep the price down.

  • Wildcat

    farmers = the largest group of welfare recipients and doing the most damage to our environment

  • Liz

    The two of you have no idea what you are talking about. By the way, do you eat? Where does your food come from? What helps keep your food prices manageable as compared to the cost of food in the rest of the world?

    • Wildcat

      I would rather pay higher prices than to see our vegetation denuded, streams clogged with silt or sucked dry, and air polluted with insecticides and herbicides. Farmers have raped the Great Plains creating an unsustainable monoculture simply for their own profit. Don’t act like they’re doing the rest of us any favors or have altruistic intentions. A farmer sees a wheatfield as $$.. .I see it as a wasteland, compared to what it once was.