Labor comprises a significant portion of total farm production expenses. About 36 percent of all farms had hired labor expenses and 12 percent had contract labor expenses. The importance of labor varied significantly by farm type and size of farm. These types of farms are the least mechanized, and many of the commodities they produce are still harvested by hand. At the other extreme, labor expenses comprised less than 5 percent of all production expenses on beef cattle, hog, sheep, poultry, and cash grain farms.
Larger farms are more likely to have labor needs in excess of that provided by the family farm.
Farms of 260 or more acres, which accounted for only 32 percent of all farms, had 70 percent of all labor expenses in 1992. The increase in farm debt in 1996 is slightly higher than the recent trend of modest growth in outstanding loan balances. The availability and use of credit play a significant role in the sustained profitability of farm enterprises. Real estate loans generally have terms of 10 to 40 years, and are ordinarily used to purchase farmland or to make major capital improvements to farm property. Seasonal operating loans are made for less than 1 year, while loans to purchase machinery and equipment or livestock may run for 7 years or more.