Released: April 23, 2001

Energy Costs, Drought Knock Kansas Farm Income Down 7.7 Percent

The Kansas Farm Management Association assists farmers and ranchers with economic and financial risk management with the goal of improving profitability. It is managed by the Department of Agricultural Economics and by the Research and Extension programs at Kansas State University.

The 2000 income was also down 10.8 percent from the five-year average of $43,946.

Income was supplemented, however, by government payments which averaged $45,614 per farm or 116 percent of net farm income.

Dryland crop yields for Farm Management members fell 5, 10 and 11 bushels per acre respectively, for wheat, grain sorghum and soybeans, Albright said. Irrigated yields fell 12, 9, 8, and 11 bushels per acre, respectively, for wheat, corn, sorghum and soybeans.

"As a result, ending inventories were lower for many producers," Albright said. "Loan deficiency payments [LDP’s], which occur if commodity prices are below loan rates, are based on actual production. So, the lower yields also resulted in reduced LDP’s."

Government payments, which included Agricultural and Marketing Transition [AMTA] payments, Market Loss Assistance [MLA] payments, Oilseed payments, and LDP’s, obviously remained a significant source of income for farmers and the production agricultural community.

Livestock income as a whole sank 8.6 percent, although cow-calf and swine operations showed improvement to their bottom lines. Farms classified as "cowherd" increased their net farm income by 59.6 percent to $23,804 per operator, while sow and litter operators’ income increased about 1 percent. The net farm income per operator for cattle backgrounding and backgrounding-to-finish operations sank 27.6 percent and 10.4 percent, respectively. In addition, dairy operations’ net income per operator fell 17 percent to $38,891, primarily as a result of reduced milk product receipts, Albright said.

The KFMA data also showed that cash operating expenses rose 6.2 percent to $155,136 per farm.

"Rising energy prices had a significant impact on Kansas farmers," the economist said. "Higher diesel and natural gas prices increased fuel, irrigation energy, and fertilizer costs."

The result was a $2,551-per-farm jump in combined gas, fuel and oil expenses – a 33 percent increase.

"Irrigation energy costs for farms classified as cash crop irrigated farms increased 127 percent to $34,206 per farm," Albright said.

Fertilizer costs jumped $1,734 or 10.3 percent per farm. Prices for nitrogen fertilizers, which are a derivative of natural gas, were the primary determinant of the increased fertilizer costs.

"Given that energy and fertilizer costs remain elevated, farmers should be evaluating their optimal crop mixes, fertilizer application rates, and tillage practices for 2001," Albright said.

For more information, interested persons can call the local county Extension office or Albright at (785) 532-1513.

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K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by:
Mary Lou Peter, Communications Specialist
mlpeter@oznet.ksu.edu
K-State Research & Extension News