May 31, 2001

Records Indicate Jump in 2000 N.D. Farm Family Living Expenses

The average living expenditures of 336 farm families enrolled in the North Dakota Farm Business Management Education Program was $36,858 in 2000, an increase of nearly $2,000 -- a 5.6 percent jump -- compared to 1999 living expenses.

This average does not include income taxes or self-employment taxes, says an agricultural economist at North Dakota State University. On average, there are 3.6 people per household in this group.

"The size of the increase for 2000 was greater than the change in the general level of prices as measured by the U.S. Consumer Price Index (CPI) which rose 3.4 percent for 2000," says Andrew Swenson, farm management specialist with the NDSU Extension Service. This indicates the increase may not be solely because of inflation but farm households may have purchased more items or items of greater quality.

The spending habits of North Dakota farm families from 1994 through 1998 may provide some rationale for the increase in 2000 expenditures and the large increase that occurred in 1999, Swenson says. During these five years, the increase in farm family living expenses had been averaging only 1.4 percent annually, compared to 2.4 percent annual increase for the CPI.

"Those years were characterized by low net farm income and, I assume, some serious belt-tightening of farm household budgets," Swenson continues. "A rebound in net farm income in 1999 and in 2000 plus a 22 percent increase in non-farm wages over those two years may have released pent-up consumer demand of farm households."

The largest increase in expenditures for 2000 was vehicle purchases and operation, which went from less than $4,100 to about $4,850. Part of this increase was due to higher fuel costs. Energy prices also impacted utility expenditures, which increased 11 percent. Household operation, supplies and upkeep rose about $350 to $6,042 and expenditures on recreation and personal purchases increased by $375 to $5,548 per household in 2000, Swenson says.

Categories for clothing outlays of $1,915 and medical care and health insurance of $5,360 were actually lower than 1999, but were higher than 1998. Swenson believes the decline in medical expenditures is because more farmers/spouses have off-farm jobs and healthcare benefits. Total food and dining-out expense in 2000 increased slightly to $5,695, but continues to decline as a portion of total farm household expenses.

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, aswenson@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu

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