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Farm production expenditures reach record high in 2011, USDA data show

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Willmar, 56201

Willmar Minnesota 2208 Trott Ave. SW / P.O. Box 839 56201

WILLMAR -- According to the most recent data from the U.S. Department of Agriculture, farm production expenditures reached a record-high $318.7 billion in 2011, a 10.2 percent increase over 2010.

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In its latest annual report on farm production expenses, USDA estimated that average production expenditures, on a per farm basis, totaled $146,653 in 2011, an increase of 11.3 percent over the previous year.

The largest expenditure category was feed, on which farmers spent an average of $25,129 in 2011. Averages for other large expenditure categories include farm services - $17,075; livestock, poultry and related expenses - $13,163; and farm labor - $12,334. Together, these four categories accounted for nearly half of all production expenditures on U.S. farms in 2011.

Nearly a third of all 2011 farm production expenditures occurred in the Midwest region, where farmers reported spending a total of $98.7 billion.

As in prior years, fuel costs accounted for a significant portion of farm production expenditures, with farmers spending more than $15.3 billion in 2011. Diesel fuel made up nearly two-thirds of all fuel expenditures, with farmers spending more than $10 billion in 2011, a 23.7 percent increase from 2010. They also spent $2.8 billion on gasoline, $1.6 billion on liquefied petroleum gas and $820 million on other fuel in 2011.

The farm production expenditure data are based on the results of a nationwide survey conducted by USDA's National Agricultural Statistics Service.

Minnesota's corn crop rated best of major corn states

Despite one of the hottest and driest summers on record, Minnesota's corn crop has apparently fared far better than other major corn producing states.

According to USDA's August Crop Production Report, Minnesota corn yields are expected to average 155 bushels per acre, down only 1 bushel from the 2011 average. This estimate was based on field conditions as of Aug. 1.

Despite the slightly reduced yield estimate, corn production in Minnesota is forecast to total 1.28 billion bushels this year, up 6 percent from 2011. The higher production total is largely because Minnesota's acreage of corn harvested for grain is expected to increase from last year's 7.7 million acres, to a record high of 8.25 million acres.

Minnesota's expected average corn yield far exceeds that of other major corn producing states. In Iowa, USDA estimated an average yield of 141 bushels per acre, down 31 bushels from last year's average of 171. Corn yield estimates from other select states include: Wisconsin - 132; Ohio - 126; Illinois - 116; Indiana - 100; South Dakota - 98; and Missouri - 75.

In terms of soybeans, Minnesota farmers are expected to harvest 263 million bushels this fall, down 3 percent from 2011. Soybean yields are forecast to average 38 bushels per acre, down slightly from last year's average of 38.5 bushels.

Unlike corn, USDA's estimated soybean yields for many of the drought stricken states were higher than Minnesota's. Estimated soybean yields in other select states include: Iowa - 43; Ohio - 42; Illinois - 37; Indiana - 37; Wisconsin - 36; South Dakota - 31; and Missouri - 30.

For Minnesota sugar beet farmers, 2012 might end up in the record book. According to USDA, sugar beet production in Minnesota is estimated at 12.8 million tons, up 43 percent from last year. Minnesota sugar beet yields are expected to average 27 tons per acre, up 8 tons from last year. If realized, this would be a record-high yield for Minnesota sugar beets.

In the August report, USDA forecast that U.S. corn production will total 10.8 billion bushels, down 13 percent from 2011. This would be the lowest production total since 2006. Nationwide, corn yields are expected to average 123.4 bushels per acre, down 23.8 bushels from 2011. This would be the nation's lowest average corn yield since 1995.

Soybean production in the U.S. is expected to total 2.69 billion bushels this year, down 12 percent from 2011. Based on Aug. 1 field conditions, soybean yields are expected to average 36.1 bushels per acre, down 5.4 bushels from last year. This would be the nation's lowest average soybean yield since 2003.

Dairy producers receive payments for June milk

Due to the combination of unusually high feeding costs and lower milk prices, dairy producers will qualify for payments under the U.S. Department of Agriculture's Milk Income Loss Contract program for milk produced and sold during the month of June.

Initially authorized by the 2002 farm bill, and then reauthorized under the 2008 farm bill, the Milk Income Loss Contract program provides monthly financial assistance whenever the Boston Class I milk price falls below the payment trigger price of $16.94 per hundredweight. In that case, dairy producers qualify for a payment rate equal to 45 percent of the price difference.

Under the provisions of the 2008 farm bill, the $16.94 trigger price is adjusted upward whenever the monthly national average cost for a 16 percent protein feed ration is greater than $7.35 per hundredweight.

According to USDA, feeding costs for the month of June warranted an upward adjustment of the $16.94 trigger price to $21.53, resulting in a final payment rate of approximately $1.36 per hundredweight.

According to USDA's National Agricultural Statistics Service, the average price received by Minnesota dairy producers during June was $17.40 per hundredweight, up $0.10 from the May average price. Last June, Minnesota's average milk price was $21.20 per hundredweight.

Based on milk futures prices and projected feeding costs, it appears likely that dairy producers will continue to qualify for Milk Income Loss Contract program payments for milk produced and sold through the month of September, when the program expires.

Wes Nelson is executive director of the USDA Farm Service Agency in Kandiyohi County.

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