Growers are being urged to reduce their cost of production for the 2016 crop because of lower prices and tighter profit margins. But for some operations, this may also mean cutting their standard of living. Reducing your cash rents, equipment costs, and how much you pay for a bag of seed may be hard, but what may be even harder is reducing your family living costs. Purdue Economist Christ Hurt says that is the difficult position some farm families may find themselves in, “Lifestyle changes may become involved. Now that is very difficult to do, and farmers quickly tell us reducing costs like health insurance is almost impossible; and we understand that. But lifestyle may have to change in some cases.”
Hurt says this may be especially hard for younger farmers, “Those who have been farming 10 years or less will say, ‘I have never done that before.’ Those who have been around a little longer will have been through tight times.” Purdue figures show that over the past 10 years, on average, farm family living costs have risen faster than farm production costs.
Hurt told HAT the good news is that most families are going into this period in good financial shape, “During the good times, most farm families got in good financial shape. So we come into this downturn with the farm financial situation, in general, in good shape. There will, however, be a few families who are not in good financial shape, and they are going to have to work very closely with their lender.” He cautions that these tight times may last for several years and that, in the end, most farms will have to work closely with their lenders.