KNUTSON: Cutting family spending tough but necessary
GRAND FORKS, N.D. -- If you talk with agricultural bankers, economists and accountants, as I often do, you keep hearing the same thing: farm family living expenses need to come down. The experts are right. Many, perhaps most, farm families need t...
GRAND FORKS, N.D. - If you talk with agricultural bankers, economists and accountants, as I often do, you keep hearing the same thing: farm family living expenses need to come down.
The experts are right. Many, perhaps most, farm families need to spend less on themselves.
No, don't write nasty emails. I'm not suggesting farmers live extravagantly or spend foolishly. I'm not drawing any moral conclusions or saying their spending is good or bad, right or wrong.
What I'm saying is this: When times are good economically and people make more money, their spending increases. Farm families earned more during the 2008 to '12 ag boom, and they spent more on themselves. That's simply human nature.
Now, they're making less money - or even losing money; many farming operations will finish in the red this year - and they need to cut family spending. That's simply economic reality.
To their credit - or perhaps at their lender's insistence - some farmers already have cut back on family spending. Farms participating in the North Dakota Farm Business Management Education Program spent less on family living expenses in 2015 than in the previous three years. Clothing, vehicles and personal purchases and recreation accounted for most of the decline, according to program records.
Whether those reductions are adequate remains to be seen.
By this point, I'm sure, some loyal Agweek readers are muttering through clenched teeth, "But what about the big problem, the thing we can't control?"
They're talking about health care costs, and they raise a valid point. By all accounts, health care is increasingly expensive for farmers and their families. One example: Farms in the North Dakota farm management program reported spending an average of $11,613 on medical care and health insurance in 2012. That figure has increased steadily to $13,753 in 2015, and anecdotal evidence suggests it will be even higher this year.
When farmers say, "Hey, the only way we can reduce living expenses is not to get sick," they're being only partly facetious.
Cutting family spending won't be easy. It might be virtually impossible. But it needs to happen nonetheless.