It’s tricky to give a definitive “biggest expenses” list that applies to all local farmers in the USA, as it varies wildly by farm type, size, and location. However, based on my knowledge and some research, here are some major expense categories, with sources:
1. Feed: This is a huge one, especially for livestock farmers (dairy, beef, poultry, etc.). Feed costs fluctuate a lot based on grain prices, weather, and transportation. * Source: USDA Economic Research Service (ERS) – “Composition of production expenses varies by farm commodity specialization” https://www.ers.usda.gov/data-products/charts-of-note/chart-detail?chartId=78283
2. Labor: Finding reliable farm labor is tough, and costs are rising. This includes hired workers and family members who contribute. * Source: USDA National Agricultural Statistics Service (NASS) – “U.S. Farm Production Expenditures, 2023” https://www.nass.usda.gov/Publications/Highlights/2024/2023_FarmExpenditures_Highlights.pdf
3. Fertilizer, Lime, Soil Conditioners: Essential for crops, but prices are volatile. Farmers need to carefully manage use to optimize yields and control costs. * Source: USDA NASS – “U.S. Farm Production Expenditures, 2023” https://www.nass.usda.gov/Publications/Highlights/2024/2023_FarmExpenditures_Highlights.pdf
4. Rent and Lease Expenses: Many farmers rent land, and these costs can be substantial, varying by location, land quality, and demand. * Source: University of Nebraska-Lincoln CropWatch – “2023 Farm Production Expenditures Down 1%” https://cropwatch.unl.edu/2024/2023-farm-production-expenditures-down-1/
5. Fuel: Powers tractors, machinery, and transportation. Fluctuations in fuel prices have a major impact on farm profitability. * Source: USDA ERS – “Composition of production expenses varies by farm commodity specialization” https://www.ers.usda.gov/data-products/charts-of-note/chart-detail?chartId=78283
6. Seed, Plants, Other Inputs: Costs of high-quality seeds, plants, pesticides, herbicides, etc., can be significant, especially for specialty crops. * Source: Iowa State University Center for Agricultural Law and Taxation – “Deducting Farm Expenses: An Overview” https://www.calt.iastate.edu/article/deducting-farm-expenses-overview
7. Repairs, Supplies, Maintenance: Farm equipment and infrastructure require regular upkeep, which can be costly. This includes tools, fencing, packaging, etc. * Source: IRS Publication 225 (2024), Farmer’s Tax Guide https://www.irs.gov/publications/p225
8. Interest Expenses: Many farmers use loans, and interest payments are a significant expense, especially with rising interest rates. * Source: USDA NASS – “U.S. Farm Production Expenditures, 2023” https://www.nass.usda.gov/Publications/Highlights/2024/2023_FarmExpenditures_Highlights.pdf
9. Property Taxes: Farmers pay taxes on land and buildings, which can be substantial, especially in areas with high property values. * Source: IRS Publication 225 (2024), Farmer’s Tax Guide https://www.irs.gov/publications/p225
10. Health Insurance: Healthcare costs are a major concern, as many farmers lack employer-sponsored insurance.
Important Notes:
- This is NOT an exhaustive list, and the order of importance varies by farm type.
- These expenses are interconnected. For example, fuel costs impact transportation, fertilizer production, etc.
- Farmers are constantly trying to manage these costs, often through technology, efficiency improvements, and diversification.
I encourage you to explore the linked resources for more in-depth information and data on farm expenses.