Production Expenses
Production expenses for 2016 for the U.S. agricultural sector are projected down (-2.8%) at
$348.7 billion (Figure 14) for a second consecutive year of decline. Multi-year reductions in farm
production expenses are relatively rare—it happened last from 1984 to 1986. Changes in input
prices (i.e., expenses) typically lag commodity price changes. Commodity prices, in general, are
in their fourth year of relative decline from record highs achieved in the 2012/13 period.
Production expenses will affect crop and livestock farms differently.
The principal expenses for livestock farms—that is, feed and feeder animals and
poultry—are both projected lower in 2016, as feed costs decline by about 1%
while replacement animal costs decline by nearly 20%. In the net, the principal
livestock expenses are forecast down 6.4% from 2015 at $82.3 billion.
The principal crop expenses—including, fertilizer, pesticides, and fuel—are
forecast down by about 5%, to $94.8 billion. Miscellaneous operating expenses,
which are projected up only slightly (1%) at $36.3 billion, include crop insurance
premiums and thus directly impact crop production.