1991 67th annual SUMMARY OF ILLINOIS FARM BUSINESS RECORDS £307 COMMERCIAL FARMS: Production Costs Income Investments / / / UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN / COLLEGE OF AGRICULTURE / COOPERATIVE EXTENSION SERVICE CIRCULAR 1322 1 CONTENTS Source of Data 1 Uses for This Report 1 Definition of Terms and Accounting Methods 2 Soil-productivity rating 2 Hay equivalents, tons 2 Sampling technique 2 Type of farm 2 Cost items 2 Return items 3 Recent Changes in Income on Illinois Farms 3 Farm business trends in 1991 3 Labor and management income 4 Family living expenditures 5 Income changes on Illinois farms 6 Northern and central Illinois farms 8 Southern Illinois farms 1 Livestock Enterprises 13 Hog enterprises 14 Feeder-cattle and feeder-pig finishing enterprises 16 Dairy enterprises 18 Beef-cow herds 19 Sheep enterprises 20 Costs, Returns, Financial Summaries, Investments, Land Use, and Crop Yields for Different Sizes and Types of Illinois Farms 22 SOURCE OF DATA Although most ofthe 1991 recordkeeping farms covered in this report are within the two smaller size This report is based on data obtained from farm groups, the figures show that they are not distributed business records on 7,233 Illinois farms. It is the 67th proportionately among the groups. There were 5,017 annual summary ofsuch records obtained from farm- farms identified by the Census with more than ,000 1 ers cooperating with the University of Illinois Co- acres in 1987. About a fifth of these farms (19.6 operative Extension Service, the Department of Ag- percent) were enrolled in the Illinois FBFM Associ- ricultural Economics, and the Illinois Farm Business ation. Ofthe 14,257 farms in the group having from Farm Management (FBFM) Association. 500 to 999 acres, 17.8 percent also participated in At present, about one out of every five Illinois the farm record program. Only about 5 percent of commercial farms with over 500 acres and one out the farms enrolled had fewer than 160 acres. The ofevery four Illinois farms with total farm sales over average size of all farms enrolled in 1991 was 742 $100,000 is enrolled in this service, which grew acres, compared with an average of 348 acres for all steadily until 1982. Except for 1988, enrollment has Illinois farms. declined slightly each year since 1982. One factor The data presented in this report is the total of contributing to this decline has been the lower levels operator and landlord income, expenses, and invest- of farm income during the last half decade, resulting ments in the farm business. The group averages are in fewer farm operators. In 1992, 10 associations in identified by size ofbusiness, type offarm, and quality 102 counties are being served by 68 full-time field ofsoil found on the farm. Where segments of Illinois staff and two half-time field staff specialists. Partici- agriculture are identified by these criteria, the data pation in this farm-business analysis program is vol- from recordkeeping farms may be used with reason- untary; cooperating farmers pay a fee for the edu- able confidence, even though the recordkeeping farms cational services. as a group do not represent a cross section of all The program's development since 1940 is shown commercial farms in the state. below. Counties Field Associa- partici- staff Farmers USES FOR THIS REPORT Year tions pating employed enrolled 1940 3 23 3 680 1950 8 59 15 2,760 The management ofa modern commercial farm 1960 10 100 33 5,494 involves decision making in the application of tech- 1970 10 102 42 6,553 nology, the choice of a proper combination of crop 1980 10 102 67 8,205 1990 10 102 70 7,192 and livestock enterprises, and effective business administration of the farming operations. A basic Estimates for 1991 indicate that 90 percent of analysis ofa farm business involves a careful study of the 7,233 farms covered in this report are larger than past performance to detect problems and strengths 240 acres. For the most part, this 90 percent falls in the farming operation. Also involved is the process within the size of business that includes farms selling of planning and developing future operations to re- $50,000 or more of farm products per year. In the alize the full potential of the land, labor, and capital 1987 Census of Agriculture, farms selling $50,000 resources available and to improve the economic or more accounted for 87 percent of all sales from efficiency of the farm business. Illinois farms. The farm-business summaries contained in this The segment of Illinois agriculture that includes report are used by individual farmers to analyze their farms with more than 180 acres is often referred to business operations and to develop plans for future as "commercial farming." In 1987, there were 44,810 farming operations. This report summarizes the in- farms in Illinois with more than 180 acres and with formation so that specialists involved in agricultural sales of $10,000 or more. The figures that follow, extension, research, teaching, and agribusiness activ- taken from the 1987 Census of Agriculture, show ities may use the data to help them perform their that these farms represented 76 percent ofthe 59,181 duties effectively. The definition of terms and ac- farms larger than 50 acres and that these farms counting measures on the following pages will be of produced more than 98 percent of the agricultural assistance in using the data. products sold from Illinois farms. The first part of the report (Tables 2 to 8) summarizes recent changes in farm income on Illinois Percent Percent of Number of farms. It also identifies economic forces and factors Acres of all census farms farms that contribute to these changing trends. The data per farms over enrolled enrolled farm 50 acres in FBFM in FBFM presented in Tables 5 through 8 are the total of 180-499 43.1 9.3 2,374 operator and landlord data. Some data used in the 500-999 24.1 17.8 2,537 text are drawn from previous issues of this report. 1,000+ 8.5 19.6 983 The second section (Tables 9 to 18) presents data OCT 2 R on livestock enterprises. The comprehensive and de- and where the value of feed fed to dairy or poultry tailed information contained in this section is a val- was not more than a sixth of the crop returns. Since uable resource for anyone interested in livestock 1973, farms with livestock have been essentially ex- production. Because part of the feed grains and cluded from the sample of grain farms in northern roughages produced on Illinois farms is marketed and central Illinois in Table 19; since 1978, from the through livestock, the margins of income from live- grain-farm sample in Table 20; and since 1982, from stock enterprises are important in interpreting the the grain-farm sample in Table 5. economic results of some farming operations. Hog or beeffarms are farms where the value of The third section (Tables 19 to 27a) discusses feed fed was more than 40 percent ofthe crop returns costs, returns, financial summaries, investments, land and where either the hog or beef-cattle enterprise use, and crop yields for different sizes and types of received more than half of the value of feed fed. farms in northern, central, and southern Illinois. It Dairy farms are farms where the value of feed is the total of operator and landlord data. It reports fed was more than 40 percent ofthe crop returns and on the 25 percent of grain farms that received the where the dairy enterprise received more than one- highest return to management per dollar of cost and third of the value of feed fed. the 25 percent that received the lowest return. It also reports on two-man and three-man hog and beef Cost items farms. A two-man hog and beef farm uses from 21 to 27 months of labor; a three-man hog and beef The value offeedfed includes on-the-farm grains farm, from 31 to 39 months. with the following average prices per bushel: corn, $2.41; oats, $1.16; and wheat, $2.71. Commercial feeds were priced at actual cost, hay and silage at DEFINITION OF TERMS AND farm values, and pasture at 40 cents per animal unit ACCOUNTING METHODS per pasture day. A pasture day represents an intake of about 20 to 25 pounds of dry matter, defined as 16 pounds of total digestible nutrients (TDN) from Soil-productivity rating the pasture used. This rating is an average index representing the Cash operating expenses include the annual cash inherent productivity ofall tillable land on the farm. outlays for these nondepreciable items: fertilizer, pes- Individual soil types on each farm are assigned an ticides; seeds (including homegrown seeds); machin- index ranging downward from 100. All ratings were ery repairs; machine hire and lease; fuel and oil; the revised in 1971 to reflect a basic level ofmanagement farm share of electricity, telephone, and light vehicle asoutlinedin Circular 1 156 ofthe IllinoisCooperative expenses; building repairs; drying and storage; hired Extension Service, SoilProductivity in Illinois. New land labor; livestock expenses; taxes; insurance; and mis- values were assigned in 1980. The annual change in cellaneous expenses. Purchased feed, grain, and live- land values represents an accounting adjustment to stock are not included because they have been de- bring land values to current market levels. ducted from gross receipts in computing the value of farm production. The interest paid is not included Hay equivalents, tons because an interest charge is made on the total farm To get the equivalents, we took the total of 1.0 ionnvleys—tomnenatl.l Bduetbtt—heotpotearlatinitnegredstebptaipdlbusy tlhoengoepre-rtaetromr multiplied by the pounds of hay, 0.45 multiplied by debt is listed separately in Tables 19a to 27a under the pounds of hay silage, 0.33 multiplied by the "Selected Cost and Return Items per Tillable Acre." pounds of corn silage, and 24 multiplied by the Machinery and equipment include depreciation, re- pasture days per feed unit (which are also multiplied pairs, machine hire and lease, fuel and oil, and the by the total feed units per cow). This total is then farm share of electricity, telephone, and light vehicle divided by 2,000. expenses. Labor includes hired labor plus family and op- Sampling technique erator's labor, charged in 1991 at $1,425 a month. Data from all records certified usable for analysis Interest on nonland capital covers the interest by field staffwere aggregated by size (acres or number charged at 9 percent on the sum of one-half the of cows), type of organization, value of the feed fed, average oftheJanuary 1 and December 31 inventory and soil-productivity rating. Electronic data-process- values of grain, plus the average of the January 1 ing was used to summarize the data. and December 31 inventories of remaining capital investment in livestock, machinery and auto, build- Type of farm ings, and soil fertility, plus one-halfthe cash-operating expense, exclusive of interest paid. In Tables 5, 7, Grain farms are farms where the value of the and 8, this charge is combined with the land charge feed fed was less than 40 percent of the crop returns or net rent and labeled interest charge on capital. The average cash interest paid per farm by all farm charge for unpaid labor and the interest or land operators was $15,617. Details on operator and land- charge on capital are deducted from net farm income. lord shares of expenses and income are published The rate earne—d on investment is capital and man- annually in research reports by the Department of agement earnings interest on all capital and land — Agricultural Economics. charge, plus management returns per $100 of the Land charge or net rent is the bare land priced at total farm average annual investment. current land values multiplied by 4.5 percentto reflect net rents received by the landlord. Total nonfeed costs include cash-operating ex- RECENT CHANGES IN INCOME penses, adjustments for accrued expenses and farm- ON ILLINOIS FARMS producedinputs, depreciation, andchargesfor unpaid labor and interest including land charge. Purchased Farm business trends in 1991 feeds and livestock are omitted. The basicvalueofland (the currentbasis) isadjusted Illinois agriculture is based largely on crop pro- each year according to the February index of land duction, especiallycornandsoybeans. In 1991, Illinois prices in Illinois as reported by the United States ranked second in the nation in the production of Department of Agriculture (USDA). An additional soybeans and second in the nation in the production adjustment was made to this index in 1984 to reflect of corn. The total value of corn and soybeans pro- the large drop in land values. The land value index duced on Illinois farms was 17 percent of the total for 1991, using a base earning value of 1979 = 100, U.S. production for these crops. In 1990, the total was 66. value was 65 percent ofthe total value ofproduction The capital account adjustment includes the gain in Illinois from all crops and livestock and 89 percent or loss on capital items sold less any amortization of the value of production from all crops produced. deduction. Crops. Year-to-year variations in net income are related to crop yields, grain prices, and acres in high cash-value crops. Corn and soybean yields in 1991 Return items were lower than in 1990 due to drought conditions in certain areas of the state. In 1991, the average Crop returns are the sum of grain, seed and feed corn yield for Illinois was 107 bushels per acre, 20 sales, the value of homegrown seed used, the value bushels below 1990 and the third poorest yield in of all feed fed (except milk), government-deficiency the last decade. Recordkeeping farms averaged 111 and diverted-acre payments received and accrued, bushels per acre in 1991, 21 bushels below the 1990 andthechange in value forfeedand grain inventories, yield. Soybean yields were 37.5 bushels per acre in less the value of feed and grain purchased. Govern- 1991, compared with 39 in 1990. Recordkeeping ment PIK (payment in kind) certificates purchased to farms averaged 42 bushels per acre in 1991. Crop redeem grain under government loan are included yields on the 7,233 recordkeeping farms covered in in the feed-and-grain purchase account. thisreportaveraged 4 to 12 percentabove theaverage The total value offarm production is the cash and for all Illinois farms reported by the Illinois Crop accrued value of sales of products and services, less Reporting Service. the cost of purchased feed, grain, and livestock, plus The prices received for all soybeans sold during the change in inventory values for grain and livestock, the year averaged 10 to 14 cents per bushel below plus the value of farm products used. 1990 prices (Table 1). Corn prices received in 1991 Netfarm income is the value of farm production, averaged 1 to 3 cents less than those received in less total operating expenses and depreciation, plus 1990. Wheat sold for 48 to 64 cents less per bushel gain or loss on machinery or buildings sold. Net farm during the year. Crops under loan with the Com- income includes the return to the farm and family modity Credit Corporation (CCC) and forfeited at for unpaid labor, the interest on all invested capital, the end ofthe loan period are included as grain sales. and the returns to management. The selling price would be the loan rate for that Labor and management income per operator is total particular crop. Positive marketing margins on old- net farm in—come, less the value—of family labor and crop corn inventoried at the beginning of the year the interest including net rent charged on all cap- averaged about 17 cents. The average price received ital invested. This figure, as the residual return to all for old-crop soybeans equaled the inventory price. unpaid operator's labor and management efforts, is The year-end, new-crop corn inventory price was 10 then divided by the months of unpaid operator labor cents higher than it was the year before, and the and multiplied by 12 to reflect income for one op- year-end, new-crop soybean inventory price was 25 erator on multiple-operator farms. cents lower. Capital and management earnings are net farm Production ofthe major crops in 1991 was lower income, less a charge for all unpaid labor. than the production levels of 1990. Compared to Management return is the residual surplus after a 1990, corn production was down 1 1 percent; soybean Table 1. Average Prices Received and Paid by Farm deteriorated into the growing season due to hot, dry Recordkeepers for Grain, Livestock, and Milk weather. As with the corn crop, yields varied greatly 1991 1990 among different geographic areas. Timely rains in August helped certain areas. Harvest began ahead of Northern Southern Northern Southern Illinois Illinois Illinois Illinois normal with some harvest being done during the last week of August. Harvest continued at a record pace GSProualridcnh—apsrecidocre—ns pceorrnbu.sh$e2l2..3307 $22..3357 $22..4338 $22..3480 and Lwiavsesctoomcpkl.etAedsebcyontdhemalajsotrwdeeetkeromfiOncatnotbeirn.farm soybeans 5.75 5.74 5.85 5.88 income is the price farmers receive for livestock and wheat 2.43 2.33 2.91 2.97 livestock products. In 1991, the average prices re- LHFioevgdessc,attoatlcllke,wepairlligchetss.p.er cwt $48.52 $53.69 cAesisovceidatbiyonfwaerrmer1e0copredrkceeenptelrosweinr ftohrehIolglsi,no5ispeFrBceFnMt weights 72.55 76.40 lower for fat cattle, and 15 percent lower for milk Feeder cattle, all than they were in 1990 (Table 1). The prices paid weights, prices for all weights of feeder cattle and feeder pigs aver- paid 85.94 85.42 Dairy cattle, all aged 1 percent above the 1990 price for feeder cattle weights 59.45 62.82 and 7 percent below the 1990 price for feeder pigs. Sheep and wool, Lower returns due to lower prices received for fat all weights 42.82 58.62 cattle and lower year-end inventory values caused Milk per cwt 11.70 13.80 returns above feed and purchased animals for the feeder-cattle enterprise to decrease from $25.74 per hundredweight produced to $3.97 (Table 10). Lower production was down 4 percent; oat production was hog prices and lower year-end inventory values de- down 43 percent; grain sorghum production was creased returns above feed cost from $27.15 per down 5 percent. Wheat production was down 50 hundredweight produced to $17.67. Returns above percent with the average wheat yield of 32 bushels feed were below the 5-year average for 1987 through per acre the lowest since 1974. Hay production was 1991 by $2.46 per hundredweight produced. Lower down 6 percent. The Illinois 1991 All Crop Produc- milk prices in 1991 made dairy returns above feed tion Index, using a base value of 1977 = 100, was cost per cow drop from $1,471 in 1990 to $1,064 in 94. This figure was down considerably from the figure 1991 and 15 percent below the average for the 5- for the previous year. Acreages ofcorn harvested for year period from 1987 through 1991. grain increased 6 percent from 1990 to 1991, while soybean acreage was unchanged from 1990. The Labor and management income acreage planted to soybeans was the same as in 1990 and 1984 and is the largest acreage planted to soy- The average operator's share of labor and man- beans in Illinois. Wheat acreage harvested for grain agement income for the 5-year period from 1987 decreased 24 percent. through 1991 on all northern Illinois recordkeeping Conditions for planting the 1991 corn crop were farms (located north of a line from Kankakee to near normal. Corn planting began the first half of Moline) was $18,221. Operators on 1,724 grain and April, abouta weekaheadofaverage. Farmersplanted hog farms in central Illinois had 5-year average earn- 6 percent more acres of corn in 1991 than in 1990. ings of $23,100 (Table 2). Central Illinois occupies Planting was complete by the first ofJune, which is the area between the Kankakee-Moline line in the near normal. Cropdevelopment progressed well ahead north and the Mattoon-Alton line in the south. Smaller of average throughout the growing season. farms and variable soil quality in northern Illinois Crop conditions started well over most areas of have generated smaller earnings from crops. The the state but began to deteriorate inJuly and August farms in northern Illinois typically average 5 to 10 due to lack of rainfall. However, crop conditions percent lower crop yields than those in central Illinois. varied considerably among differentareas ofthe state. Northern Illinois has a heavier concentration of The eastern and northeastern areas were hit hardest livestock, which had lowerearnings in 1991 compared while the west and southwestern areas had better- to 1990. The difference in earnings between central than-average yields. Corn harvest began earlier than and northern Illinois increased by $694 in a com- usual in late August and finished two to three weeks parison of the 5-year averages for the periods from ahead of schedule. 1986 through 1990 and from 1987 through 1991. Soybean planting began in late April but pro- The northern Illinois area in general suffered more gressed behind schedule due to wet weather condi- from the drought than central Illinois. The record- tions in May. Planting progress improved greatly the keeping farms in northern Illinois averaged 554 till- end of May and intoJune. Planting was complete by able acres per farm, compared with an average of the second week ofJune, slightly ahead of schedule. 679 tillable acres on farms in central Illinois. The condition of the soybeans started out well but The figure for labor and management income — . ' Table 2. Operator's Five-Year Average Share of Labor level of income received is a measure of overall and Management Income by Size and Type of farming efficiency and includes compensation for the Farm, 1987 Through 1991 risk involved. The income includes the operator's Number of acres per farm gross sales and the net change in inventory. This Under 340 to income is reduced by operating expenses, deprecia- 340 649 650+ All tion, a charge for unpaid family labor, 9 percent Northern Illinois interest on nonland investment, and a land-use charge Acres of tillable equivalent to the average net rent received by land- land 234 462 911 554 owners for crop-share leases from 1987 to 1990. Labor and management earnings by type of farm Whenever the income figures in Table 2 fall Grain $5,023 $17,136 $26,458 $19,508 below the amounts required for living expenses and Hog 16,619 20,193 28,101 20,507 Beef8 -2,977 9,146 10,416 6,841 income and Social Security taxes, operators must use Dairy 14,649 22,174 ... d 17,809 the charges deducted for interest on equity capital to All 10,244 17,643 24,955 18,221 pay these expenses. If we assume that $30,000 is Central Illinois needed to pay living expenses and income and Social Acres of tillable Security taxes, these figures for 5-year average, labor land 255 490 938 679 Labor and management earnings by type of farm and management income indicate that to pay these Grain" $ 8,817 $19,701 $34,962 $26,004 expenses, the average farm operator's family uses Grain 3,650 14,466 25,399 19,537 between $1,000 and $25,000 ofthe return for equity Hog 11,971 20,218 29,751 21,275 capital, depending on the location and type of farm. All 8,279 18,143 30,741 23,100 Using part ofthe return to equity to pay family living Southern Illinois expenses indicates that the farm operator is not Aclraensdof tillable 247 572 1,096 749 receiving a competitive return to either his labor and Labor and management earnings by type of farm management or his equity in the business. Off-farm Grain $6,145 $11,357 $24,445 $19,045 income could be used to pay for some of the family Hog 12,420 24,663 . . d 21,827 living expenses. Dairy 25,904 32,065 ... d 29,198 All 14,065 19,167 24,445 20,658 aIncludescentral Illinois. Family living expenditures bHighly productivesoilswith soil-productivityratingsfrom 86to 100. cdHDeaatvay-tnioltlaavnadilatbrlaen.sition soilswith soil-productivityratings from56to85. Total cash living expenditures for a sample of 456 central Illinois, sole-proprietor, farm-operator families in 1991 averaged $32,480 (Table 3). This varies considerably, depending on the location and figure is 1 percent higher than the 1990 average. type of farm. For the period from 1987 through Capital purchases for family living expenses of$4,418 1991, operators in southern Illinoisaveraged $20,658 include the family's share of the auto, plus items that for labor and management. This average decreased exceed $250 and will last more than one year. Capital by $511, compared with the average for the 5-year purchases for family living were 12 percent of the period from 1986 through 1990. When the average total cash outlay for all family living expenditures in earnings for the 5-year period from 1987 through 1991. 1991 are compared with the earnings from 1986 The average farmer in this sample paid $15,550 through 1990, earnings increased slightly in northern in interest in 1991 on operating, machinery, and long- and central Illinois and decreased in southern Illinois. term real estate debts. This interest expense was 12 In 1991, the labor and management income for percent oftotal operating expenses (including interest all areas of Illinois averaged $10,453 per farm. This paid) and 9 percent oftotal farm receipts, or $21 per figure is $18,500 lower than the 1990 state average. tillable acre farmed in 1991. The average amount of The lower returns were a result of reduced crop interest paid in 1991 was $480 more than the amount yields, especially for corn and wheat, and lower live- paid in 1990. This is the third year in a row that the stock and livestock product prices. Gross crop returns amount of interest paid exceeded the amount paid for grain farms were $33 per tillable acre lower in in the previous year. 1991 than in 1990. Prices received for all major The most significant financial facts about 1991 livestock commodities were below the previous year's are as follows: prices. Although in general returns were lower, they • Net farm income, plus net nonfarm income, was did vary considerably between different geographic $5,402 less than the sum of family living capital areas depending upon rainfall amounts. A few areas purchases, total living expenses, and payments for had higher-than-average earnings, but most areas income and Social Security taxes. This was the first were below average. time since 1988 that this margin was negative and The income or salary of—the farm operator only the third time since 1984; whether tenant or part-owner is the return for the • Liabilities of $202,708 as of December 31, 1991, labor and management provided by the operator. The were 53 cents for each dollar of farm-only assets, . Table 3. Average Sources and Uses of Funds Over A Four-Year Period and by Noncapital Living Expenses for Selected Illinois Farms All records, average per farm Family of 3 to 5, 1991a 1991 1990 1989 1988 High-third Low-third Number of farms 456 408 402 365 95 95 Tillable acres farmed 731 719 709 661 892 563 Acres owned 131 120 119 116 120 90 Farm assets, January 1b $381,588 $358,394 $335,756 $321,422 $435,352 $286,245 Farm assets, December 31b 383,283 384,363 335,420 303,897 437,488 287,947 Liabilities, January 1 198,764 183,161 175,939 187,670 259,314 152,298 Liabilities, December 31 202,708 203,168 182,841 175,131 268,503 153,650 Net farm income 30,596 50,825 45,047 17,438 37,177 22,457 Source of dollars Net nonfarm income $ 12,226 $ 12,624 $ 10,502 $ 9,654 $ 15,504 $ 11,537 Money borrowed 118,446 116,122 90,394 91,872 179,209 85,461 Farm receipts 177,832 180,737 156,717 163,138 233,982 149,306 Total sources $308,504 $309,483 $257,613 $264,664 $428,695 $246,304 Use of dollars Interest paid $ 15,550 $ 15,070 $ 13,850 $ 12,907 $ 21,438 $ 11,779 Cash operating expenses 111,037 112,943 97,737 101,802 150,975 95,382 Capital farm purchases 22,829 27,834 18,299 13,237 27,770 21,015 Payments on principal 113,510 98,101 85,797 104,689 168,916 83,651 Income and Social Security taxes 11,326 9,444 8,040 7,926 13,213 8,344 . . Net new savings and investment. -2,646 9,710 1,070 -5,739 -4,269 -2,457 . . Total li—ving expenses $ 32,480 $ 32,090 $ 28,499 $ 26,439 $ 46,080 $ 23,283 Living capital purchases _ 4,418 4,291 4,321 3,403 4,572 5,307 Total uses $308,504 $309,483 $257,613 $264,664 $428,695 $246,304 'Recordswere sorted intothirdsaccordingtototal noncapital livingexpenses. bModified-oost basis, exceptthe landvalue, whichwas held atthesamecurrentvalueforJanuary 1 and December31 including land at current value and machinery at tax are subtracted, the low one-third group had depreciated value. The 53 cents on the dollar was $8,244 more dollars remaining than the high one- the second lowest since 1985; third group. • Although considerably lower than the year before, Living expenses included cash expenditures for capital purchases for farm machinery and equip- food, operating expenses, clothing, personal items, ment were at their second highest levels since 1979; recreation, entertainment, education, transportation, • Theamountofmoney borrowedexceeded principal life insurance, contributions, and medical expenses. payments for the third year in a row, after three The sample of 456 farms contained 47 more tillable years in which principal payments exceeded money acres than the average ofall the recordkeeping farms borrowed; in the state. Management was also considered slightly • The amount of noncapital living expenses per till- above average. In view of these factors, average total able acre farmed was $44, which was the second living expenses for all recordkeeping families (ex- highest amount in recent years; cludingcapital purchases) are estimated to be between • Income and Social Security taxes paid increased by $25,000 and $27,000 or 15 to 20 percent below the $1,882,andthe total amountoftaxespaid, $1 1,326, average total living expenses of these 456 central was the largest amount since this study began. Illinois farms. When the $12,226 net nonfarm income The 1991 records from three- to five-member for 1991 is used for living expenses, the remaining $24,672 must be generated from the farm business families were sorted into high one-third and low one- to pay the $36,898 used for total living expenses tehxiprednsgerso(uspese Taacbcloerd3i).ngThteo ttohtealfcaamsihlyl'isvintgotealxpelinvsiensg i$n2c4l,u6d7i2n,gafmamoiulnytslivtiong$3ca4piptealr ptuilrlcahbaleseasc.reThfearmfiegdu.re, for the high-third groupaveraged $46,080, compared with $23,283 for the low-third group. The high-third group farmed 329 more acres than the other group Income changes on Illinois farms and owned 13 percent of the land farmed; the low- The average operator's net farm income for all third group owned 16 percent of the land farmed. farms in 1991 was $25,502; it was $48,211 in 1990 The results indicate that the high-third group had (Table 4). Operator net farm incomes decrease stead- more nonfarm taxable income. The high-third group ily as a higher percent of gross farm returns is used had 75 percent more outstanding debt and a higher to pay interest. On the average, when more than 25 net farm income. When net farm income is added to to 30 percent of gross farm returns is used to pay net no—nfarm income, and total family living ex- interest, the operator's net farm income is usually pens—es including capital purchases for family liv- negative. This was the case in 1991 when net farm ing and payments for income and Social Security incomes averaged only $95 when interest as a percent