Not surprisingly, it’s one of our highest ranking search terms. Apparently, tons of people want to know if farmers are rich.
And I think the answer is, no. They are rich in all the things that matter, but are pretty middle class. They just deal with a lot of money coming in AND a lot of money going out. And all that money coming in looks like a lot if you don’t know the whole story.
So here it is … the whole story. I hope you take the time to read through what sounds confusing and get to the summary at the bottom because it’s worth it! Promise.
In order to grow a crop, farmers must buy things like seeds, equipment, chemicals and fertilizer (surely one of you has a bag of Miracle Gro around for the garden, right?). And there are also the costs that you don’t really think of like land, and maybe someone to help you get the crops planted or harvested in the span of a few weeks.
According to the University of Illinois, those costs – input costs – average to about $600 per acre for corn in Illinois. And, I should clarify: the $600 includes equipment, labor, seeds, fertilizer, and chemicals. No land. And land is expensive.
Using last year (2013) as an example, farmers made an average of $900 per acre on their crops. If we subtract the input cost average, we can assume that a farmer made about $300 per acre last year. But did you know that most farmers are renting the land that they farm?
Cash rents for land in Illinois are widely variable, depending on the soil type and productivity of the land. A farmer might pay $60 per acre to farm it or $400 an acre. But since we’re working in averages here, we’ll say that farmers pay $250 per acre to cash rent their land. Subtract that from the $300 per acre and this average Illinois farmer is making about $50 an acre on the farm last year.
SO HOW MUCH DID THIS FARMER BANK?
If he’s farming 1,500 acres, he made $75,000.
If he’s farming 1,000 acres, he made $50,000.
If he’s farming 500 acres, he made $25,000.
You get the idea.
But here’s the kicker: 2013 was a GREAT year for farmers.
WHAT’S A BAD YEAR LOOK LIKE?
What does all this price structure look like in a marginal year? Well, let’s make some predictions for 2014 because although we will set a big record on overall bushels produced, prices have plummeted so farmers really won’t make any money.
Total Input Costs = $575 per acre
Total Land Costs = $250 per acre
Total Expected Income = $800 per acre
Net Expected Income = -$25 per acre
If this farmer farms 1,500 acres, he will lose $37,500.
If this farmer farms 1,000 acres, he will lose $25,000.
If this farmer farms 500 acres, he will lose $12,500.
SO ARE FARMERS RICH?
Are farmers rich? I guess it depends on your definition. Farmers work for themselves. They avoid florescent lights and opt for sunlight. They understand the feeling of hard work and a job well done. Connection with the earth and all of God’s creation is a daily part of their lives.
But farmers are not wealthy.
In good years, farmers can make decent money. And some short sighted people look at one good year and think that farmers are making a killing and have become big business.
In bad years, farmers lose big money too. The trick is, good budgeting and saving. And, of course, a healthy dose of faith. Because the good years get you through the bad years and at the end of the day, you’ve committed yourself to a life with your family, in touch with the earth, doing the very thing that you love.
And there’s a lot of value in that.