Farm Income Expected to Drop in 2012

February 17, 2012 05:35 AM
 
money in hand

 

Don’t expect 2012 to be a mirror of last year’s high profits, but still better than the last 10 years.

 
Last year was a banner year for farmers, and it doesn’t appear 2012 will be a repeat in terms of farm income.
 
USDA has forecasted 2012 net farm income to be $91.7 billion, down $6.3 billion (6.5%) from the 2011 forecast. Net cash income is forecasted at $96.3 billion, down $12.5 billion (11.5%) from 2011.
 
But, the good times aren’t really over. This year’s net cash income forecast is still $15.9 billion above the 10-year average (2002-2011) of $80.3 billion.
 
USDA defines net farm income as income from production in the current year, whether or not sold within the calendar year; net cash income reflects only the cash transactions occurring within the calendar year. Net farm income is a measure of the increase in wealth from production, whereas net cash income is a measure of solvency, or the ability to pay bills and make payments on debt.
 
The third farm income measure is net value added. In 2012, it is expected to decrease by almost $4.2 billion, to $145.1 billion.
 
USDA says the declines in each of these three farm income measures are the smallest decreases recorded since 2000. The 2012 inflation-adjusted forecasts of both net value added and net farm income are the third highest values recorded since 1980. Net value added is only 4.7% below the peak value reached during this period in 2011.

 

Here are USDA’s highlights for 2012 farm income:

  • All three measures of farm income are expected to decline this year, but remain above 2010 levels.

 

  • Crop receipts are expected to experience a slight increase in 2012. A marginal decline is anticipated for 2012 U.S. livestock sales.

 

  • Increases in sales of corn, most other feed grains, and peanuts are predicted to offset declines in wheat, hay, vegetables/melons, and fruits/tree nuts.

 

  • Drought in the U.S. in 2011 is expected to depress 2012 sales of many crops.

 

  • Sales of red meats are anticipated to remain high, while a price-led decline in milk sales is forecast.

 

  • Total production expenses are forecast to rise $12.5 billion (3.9%) in 2012 to $333.8 billion.

 

  • The major 2012 crop-related expenses (seeds, fertilizer, pesticides) are projected to increase moderately (around 1%) as a group while the key livestock-related expenses (feed, livestock/poultry purchases) are forecast to rise 2.1%.

 

  • Government payments paid directly to producers are expected to total $11.0 billion in 2012, a 4% increase from the preliminary estimate of $10.6 billion paid out in 2011.
 
 
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Anonymous
2/17/2012 09:53 AM
 

  The reason it will drop is not just because of potential falling prices but becasue of rising fertilzer costs. Anyone out there notice that as natural gas prices decline the Ammonia costs continue to rise. How many synonyms are there for the word GOUGE! And what are the leading farm orgainzation doing about this to call it to attention to Congress. Nothing as usual. Except to sell more of the product at a higher price.

 
 
Anonymous
2/17/2012 09:53 AM
 

  The reason it will drop is not just because of potential falling prices but becasue of rising fertilzer costs. Anyone out there notice that as natural gas prices decline the Ammonia costs continue to rise. How many synonyms are there for the word GOUGE! And what are the leading farm orgainzation doing about this to call it to attention to Congress. Nothing as usual. Except to sell more of the product at a higher price.

 
 
Anonymous
2/17/2012 10:43 AM
 

  Oh yes, another BANNER year of HIGH PROFITS!!! Farm profits have "almost" kept up with the profits of big oil now haven't they? Or how about the profits of machinery manufacturers, tire manufacturers, battery manufacturers, grocery retailers, excess's of Federal, State, City and local tax increases, land and home tax revenue? Come to think of it farm profit is not possible when the sky's the limit on any and all input costs.

 
 
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