NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665

May 13, 1999

N.D. Farm Family Living Expenses Continue to Rise

North Dakotans living on farms once again spent more for living expenses in 1998. Average annual expenditures for family living rose by about $650, to $31,170. Income and self-employment taxes are not included in that figure, which is based on the records of 314 farm families enrolled in the North Dakota Farm Business Management Education Program.

"The increase was slightly greater than the rise in the consumer price index of 1.6 percent for the typical urban American household," says Andy Swenson, extension farm and family resource management specialist at NDSU.

Swenson says there was a strong increase in farm family living expenses from 1985 through 1994, a period when the annual average increase exceeded $1,000. However, during the past five years, family living expenses have stabilized, with the annual figure hovering around the $30,000 level, or near $35,000 when income taxes are added in.

"The importance of family living costs is highlighted by comparing the years 1998 and 1989," Swenson continues. "Although net farm income was only $21,000 in 1989, it came closer to covering family living and taxes, which were $26,600. Last year's net farm income of $27,700 fell $7,300 short of the $35,000 needed to cover family living and income taxes."

North Dakota farm families appear to be managing their food and clothing dollars wisely. Food expenses as a percent of total farm household expenditures actually declined from 1990 to 1993 and have remained relatively flat from 1994 through 1998, Swenson says. The average food expenditure and farm family size in 1998 was $5,360 and 3.6 people, respectively. Clothing purchases accounted for 5.6 percent of 1998 farm family household expenditures; the 1990-1997 average for clothing purchases as a percentage of total expenditures was 6.1 percent.

During the past decade, average medical costs for North Dakota farm families have risen dramatically, from about $3,100 in 1989 to more than $5,100 last year. North Dakota farm families now devote more than 16 percent of their total household budget to medical care and insurance.

"The medical costs for the farm family flattened out in 1997 and 1998," Swenson says. "One reason may stem from a greater reliance by farm families on off-farm jobs and associated medical benefits."

Child care and nonfarm interest expense made up only 3.3 percent of total farm household expenditures in 1998, but these items have showed the greatest percentage increases since 1990, Swenson says. The increase in nonfarm interest expense indicates greater nonfarm debt because interest rates have been generally flat, or declining, during the 1990-1998 time frame.

"The average family size has decreased slightly during this period, so the increase in child care costs is probably associated with more off-farm employment by one or both spouses," Swenson concludes.

From 1989 through 1998, annual nonfarm wages and salaries have doubled and now total more than $10,000. But while farm families are seeking more off-farm employment, they're also working harder on the farm, Swenson says. Since 1989, the average size of a North Dakota farm enrolled in the Farm Business Management Education Program has increased by one-third—from 1,570 acres (crop and pasture) to 2,200 acres.

Farm families interested in information about planning and budgeting for their living expenses can request the following publications from county offices of the NDSU Extension Service: "Farm Family Living Trends in North Dakota" (HE453), "Taking Charge of Family Finances: How Much Should We Spend" (HE440) and "Taking Charge of Family Finances: Managing Farm Family Finances" (FE452).

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Source: Andrew Swenson (701) 231-7379

Editor: Dean Hulse (701) 231-6136

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