Farm family living expenditures increased from $43,107 in 2004 to $67,947 in 2011, according to farms enrolled in the North Dakota Farm Business Management Education Program who kept detailed family living records.
This increase occurred even though the average size of the households declined from 3.4 to 3 people. The expenditures do not consider income, Social Security or Medicare taxes.
Changes in family living expenditures from year to year are determined by changes in the prices of items purchased and changes in the amount and types of items purchased. Price changes, as measured by the consumer price index, increased by an average annual rate of 2.6 percent from 2004 to 2011, but North Dakota farm family living expenditures increased by an average of 6.8 percent.
This indicates that most of the increase in farm family expenditures was from purchasing more and/or different items, not because of inflation.
"The unusual increase in expenditures is associated with very strong net farm income during the years 2007, 2008, 2010 and 2011," says Andy Swenson, North Dakota State University Extension Service farm management specialist. "Greater expenditures on personal items, recreation, vehicles and home improvements should be expected after good income years."
The largest cost is housing, a broad category that includes household supplies, furnishings and repairs, utilities, rent, mortgage interest and insurance. These costs represent 20 percent of total farm family living expenditures. Nationally, housing costs are higher, representing 30 percent of total expenditures. Housing costs for farm families are lower because the farmhouse often is considered an integral part of the business, so little or no house rental or mortgage interest is included in family living expenses.
The medical care and health insurance category is a primary budgeting concern for most families. The percentage of North Dakota farm family expenses allocated is more than twice the national average because of the lack of employer- sponsored health benefits for the self-employed farm family, although the members of some farm families participate in off-farm jobs.
Medical care and health insurance increased from $7,291 in 2004 to $10,810 in 2011 and averaged 17 percent of total farm family expenditures during this period. Personal purchases and recreation was the third most important category, averaging 15 percent, but it spiked higher in 2011.
"Food expenses, as a percent of total farm household expenditures, actually have been in a downward trend from 15 percent in 2004 to 13 percent in 2011," Swenson says. "North Dakota farm families appear to be managing their food dollars similarly to the national average. Nationally, the Bureau of Labor Statistics (Report No. 1037, 2012) reported that food expenditures for a consumer unit of