Farm income forecast sharply higher for 2011
Sept. 1, 2011
by Eric Schroeder
WASHINGTON — Net farm income is forecast at $103.6 billion for 2011, up $24.5 billion, or 31%, from 2010, while net cash income is forecast at $114.8 billion, up $22.5 billion, or 24%, from 2010, according to an Aug. 30 brief published by the Economic Research Service of the U.S. Department of Agriculture.
Net farm income reflects income from production in the current year, whether or not sold within the calendar year, and is a measure of the increase in wealth from production. Net cash income, meanwhile, reflects only the cash transactions occurring within the calendar year and is a measure of solvency, or the ability to pay bills and make payments on debt.
The 2011 forecast of net farm income is the second highest inflation-adjusted value recorded since 1973.
Average net cash income for farm businesses (intermediate and commercial operations, including nonfamily farms) is projected to be $83,100 in 2011, according to the E.R.S. If realized, it would be nearly a 17% increase from the 2010 estimate of $71,100.
“This year brought a host of challenges for America’s farmers, ranchers and producers: Hurricanes, floods, drought and other extreme weather have driven thousands of Americans from their homes, destroyed crops, and threatened our rural communities,” said Secretary of Agriculture Tom Vilsack. “But despite the setbacks, American agriculture is thriving, demonstrating again that the men and women who own and operate America’s farms and ranches are some of the most resilient in the world.”
The E.R.S. noted that record demand (particularly export sales) and tight supplies combined with weather uncertainty are leading to considerable price strength and volatility for cash grains, cotton and soybeans. As a result, projected 2011 receipts for these major crops range from an 18% increase for soybeans to nearly a 39% improvement over 2010 for corn.
The largest increase in average net cash income from 2010 among crop farms is projected for corn farm businesses, at nearly 30%, the E.R.S. said. In contrast, average net cash income is forecast to decline in 2011 for specialty crop producers (fruits, vegetables, nursery/greenhouse) and farms that specialize in other field crop production (sugar crops, hay, silage, trees, and woody crops). Receipts for specialty crop producers are expected to be 4% higher than in 2010, but expenses are forecast to rise by 9%.
Food grain cash receipts are expected to increase almost 25% in 2011, with wheat sales expected to account for 86% of 2011 food grain receipts. Wheat sales are expected to climb 37% in 2011, the E.R.S. said.
“The price of wheat is expected to jump $2.35 per bushel as the quantity of wheat sold is expected to decline over 5% in 2011,” the E.R.S. said. “Total U.S. wheat use is expected to decline in marketing year 2011 as higher domestic use is more than offset by declining wheat exports. U.S. wheat exports are being hurt by large foreign production and lower world prices. Rice receipts, unlike receipts for most major U.S. crops, are expected to decline almost 20% in 2011 due to lower sales and prices.”
The E.R.S. noted that dairy exports have been a strong contributor to price strength for dairy products, and exports are likely to stay above year-ago levels “due to an improved world economy and increased dairy product purchases by key importers.”
Cash receipts for dairy are forecast to be 27% higher in 2011, driven by a second consecutive year of a 25% gain in wholesale milk prices, the E.R.S. said. Expenses for farm businesses that specialize in dairy production are forecast to rise by 14% in 2011, with feed, fuel, and utilities contributing most to the increase. Even with higher production costs, the average net cash income for dairy farm businesses is forecast to be more than 50% higher than 2010, according to the E.R.S.