The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Mike Walsten has covered major business trends in agriculture for more than 40 years.
USDA today projects another highly profitable year for the nation's farmers, which is positive for land demand. But it does show net farm income slipping from last year's record while costs continue to rise, but at a slower pace. USDA pegs total 2012 net farm income will reach $91.7 billion in 2012, down $6.3 billion (6.5%) from last year's record and the second highest on record. On the income side, USDA forecasts a 0.7% rise in crop income and a 0.1% decline in livestock income. On the production cost side, USDA projects a 3.9% increase for 2012 compared to last year. While an increase, the rate is gain is much more moderate compared to an estimated 12.5% increase in production costs in 2011. Total farm debt is also expected to increase to $254.1 billion, a 3.8% rise. Farm equity is expected to rise to $2.22 trillion. The debt-to-equity ratio is expected to decline slightly to 11.4% in 2012 compared to 11.7% in 2011. The debt-to-asset ratio is expected to decline from 10.5% in 2011 to 10.3% in 2012.
Click here for the full USDA report.
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