Labor costs drive up Washington farm spending
By Steve Brown
Washington farmers and ranchers had to spend 23 percent more for production in 2012 than in 2011. Average costs per farm totaled $215,522.
Only three states showed a greater yearly increase: Kansas (39 percent), Missouri (30 percent) and Nebraska (27 percent). And only six states had higher average costs: Nebraska ($470,000), California ($387,000), Iowa ($291,000), Kansas ($250,000), Illinois ($244,000) and Minnesota ($223,000).
Numbers for all states were reported in the recently released Agricultural Resource Management Survey, conducted from January to April 2013.
Chris Mertz, director of USDA’s NASS Northwest Regional Office, explained why the greatest increases and the highest costs were centered in the Midwest and Plains states.
"There's a lot of livestock raised there, so a greater percentage of their expenses are in feed," he said. "Also a lot of farmers are paying higher rent as demand for the land increases. And with all the corn and soybeans raised there, the rising prices of commodities reverberate through other expenses."
In Washington state, the largest expenditure category in 2012 was labor, which cost an average of $47,583 per farm, an increase of 36 percent from 2011. Washington has the highest minimum wage rate in the U.S., $9.19 an hour.
Other major increases for Washington farmers were farm services, up 21 percent; rent, up 30 percent; and fertilizer, lime and soil conditioners, up 67 percent. Fuel costs were virtually unchanged.
California farmers’ overall costs increased less than 1 percent. The greatest changes were in feed, which increased 7 percent, rent, up 8 percent, and interest costs, which dropped about 30 percent. Fuel costs were virtually unchanged in California, as well.
The other Western states — Oregon, Idaho, Montana, Wyoming, Nevada, Utah, Colorado, Arizona and New Mexico— were not listed individually. They saw a 2 percent decrease overall. Interest rates dropped 29 percent, fuel dropped 14 percent, but taxes increased 10 percent and labor increased 6 percent.
For the U.S. overall, farm production expenditures increased 10 percent between 2011 and 2012. The $351.8 billion spent on production was a record high.
The four largest expenditures accounted for 46 percent of total expenditures in 2012: feed, 16.8 percent; farm services, 11.3 percent; livestock, poultry and related expenseses, 9.1 percent; and labor, 8.8 percent.
The greatest cost increases from 2011 to 2012 were agricultural chemicals, up 16 percent; labor, up 15 percent; fertilizer, lime and soil conditioners, up 14 percent; livestock, poultry and related expenses, up 12 percent; and rent, up 11 percent. Decreasing were interests costs, down 18 percent. Fuel costs changed only slightly, up less than 1 percent.