Farm capital expenditures increasing with farm income rise

IARN — In response to relatively stronger net farm incomes, U.S. farm sector capital expenditures have increased dramatically in the last three years, according to research by the University of Illinois.

In 2019, farm sector capital expenditures were approximately $30.1 billion. The forecasted value for 2022 is $44.2 billion. Capital expenditures include tractors, trucks, autos, machinery, buildings, land improvements, and miscellaneous expenditures.

Capital consumption represents the declining balance of capital stock or economic depreciation. The ratio of capital expenditures to capital consumption increased from 1.06 in 2019 to 1.70 in 2022. The data implies that farmers have used a portion of their strong net farm incomes in the last few years to replenish their capital stock.

The changes in expenditures during the last four years have differed among expenditure categories. Specifically, increases were larger for tractors and machinery than for autos, trucks, buildings, and land improvements.

Story courtesy of the Iowa Agribusiness Radio Network.
Pictured: John Deere 9R 640 four-wheel-drive tractor with 2230FH Field Cultivator (Photo courtesy of John Deere)
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