Farm income report predicts another stable year
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WASHINGTON, Nov. 27, 2012- All major sources of farm income are expected to rise in 2012, with the largest gains expected for farm-related income due to insurance indemnity payments, according to the Department of Agriculture's 2012 Farm Sector Income Forecast released today.
“Today's forecast is heartening. It confirms that American farmers and ranchers remained impressively resilient in 2012, even with tough odds due to one of the worst droughts in more than a generation,” said Agriculture Secretary Tom Vilsack today.
“While down slightly from the August forecast, today's estimates for net farm income are the second-highest since the 1970s, while total farm household income is expected to rise,” he said, noting that ERS also projected debt ratios to continue to fall. “The forecast suggests that strong farm income should remain a positive factor in carrying farmers and ranchers into the 2013 growing season.”
He added that the report should serve as a reminder to Congress to pass a “comprehensive, multi-year Food, Farm and Jobs Bill that provides greater certainty for farmers and ranchers in the season ahead.”
The report indicated that net farm income is forecast to be $114 billion in 2012, down 3.3 percent from the all-time high in 2011. Net cash income is forecast at $132.8 billion, down 1.4 percent from 2011.
“Despite gains in almost all sources of farm income, large increases in farm expenditures, especially for purchased feed, have more than wiped out those price-led gains to farm income,” stated the report. “Nevertheless, after adjusting for inflation, both income measures are high by historical standards.”
An increase in the value of crop production is expected in 2012, reflecting increases in receipts from food grains, feed crops, and especially oil crops, noted USDA's Economic Research Service (ERS). Feed expenses are forecast to increase almost $10 billion in 2012, the report noted.
The gains in forecast livestock and crop cash receipts come mostly from expectations of price increases, while oil crops and feed crops are the two leading commodities in value of production.
Also, farm equity is projected to achieve a new record high in 2012 as expected growth in farm assets exceeds the expected increase in farm debt. Debt repayment capacity utilization (DRCU), or the measure of farm exposure to financial risk, is forecast slightly upward while remaining at a near-historic low level.
Median total farm household income increased by 5.3 percent in 2011, to $57,050, and is expected to increase another one percent in 2012, to $57,645. Most farm households, particularly those operating smaller farms, rely heavily on off-farm income--which is forecast to rise 3.4 percent in 2012. In contrast to the farm households that operate small farms, households associated with commercial farms derive more of their income from farming activities. Their median income from farming increased an estimated 7.9 percent in 2011 to $84,649, and their total household income also increased by 7.9 percent, to $127,009.
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