Tuesday, September 20, 2016

Volatility in Farm Incomes

One thing non-farmers never (almost never) understand is volatility in farm income.

Illinois extension's website has a post on their sample of farms in the state:  in 2012 the average net labor and management* income per operator was almost $258,000, in 2015 it was -$1,700.

Of course, on average these farms had over 1,100 tillable acres.  Without looking up the average value per acre that means probably $10,000,000 in (owned and rented) land and equipment.  (On average the farmer owns about 25 percent of the land she farms.)

These are field crop farms, returns on livestock, fruit, and vegetable farms not farmed under contract would have different rates of volatility and in different years.

* One thing I learned from my high school ag class was you need to count both the return on labor and the return on management when looking at income.

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