In a report from the USDA issued today, they project that net cash income from farming will increase by 3.4 percent from 2011 to a new record of $122.2 billion. Net value added is expected to increase by $5.9 billion to $172.6 billion.
Due to the market effects of the drought and the expected large crop insurance payments, these increases are expected to be much greater than any resulting increases in input costs or livestock losses.
Gross farm income is expected to hit a new record of about $450 billion. This number was as low as $300 billion just five years ago.
Total production expenses are expected to increase by $18.6 billion or about 6 percent over 2011. It is interesting how fertilizer prices always seems to increase with grain prices.
Unlike 1988 when little revenue protection crop insurance was available, this year more farmers will benefit for these and other crop insurance policies which will keep net farm income high.