High Feed Prices Force Net Farm Income to Dip

 

OMAHA (DTN) — Revenue is up for farmers in 2012 for almost all sources of farm income, USDA reported Tuesday, but net farm income for the entire farming sector is down 3.3{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05}, mainly due to high farm expenditures, particularly for livestock feed.

 

Buoyed by high crop-insurance payments, net farm income nationally is projected to be $114 billion in 2012 despite the widespread drought. The net farm income figure is down about $4 billion from 2011's record high farm income, according to USDA's Economic Research Service.

 

Feed expenses hit livestock and poultry producers hard, rising $9.7 billion in 2012, an 18{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} increase coming on the heels of a 20{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} increase in livestock-related expenses in 2011.

 

USDA reported total median household income ticked up in 2012 by 1{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} to $57,645, mainly due to slightly higher off-farm income. USDA did not have 2012 household income figures for commercial-sized farmers, but noted those families saw farm income increase 7.9{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} in 2011 to $84,649. With off-farm income included, those families saw their median incomes average $127,009 in 2011.

 

Overall, ERS noted that farm financial-risk indicators continue to be near historic lows. Increases in farm asset values are rising faster than increases in farm debt.

 

Still, ERS economists noted that high farm receipts “will be more than offset by increases in expenses, with feed and seed expenses rising the highest among expense categories.” Adjusted for inflation, total production expenses in 2012 are more than $325 billion, the highest in history, rising $23.5 billion, or 7.6{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} above 2011 figures. Total production expenses have risen 74.5{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} over the past decade.

 

Almost every sector reports higher cash receipts, except for dairy, which declined from $40 billion last year to approximately $38 billion, mainly due to more milk being produced per cow, thus bringing down overall prices. The annual average milk price is expected to stay below 2011 figures.

 

Agriculture Secretary Tom Vilsack said the farm income forecast “is heartening.” While praising the resiliency of farmers to weather tough times, Vilsack nonetheless noted that farmers could face more difficulties managing problems such as drought if no strong safety net remains in place.

 

“This year, the farm safety net showed its mettle and merit, helping to deliver peace of mind to thousands of farmers and ranchers dealing with losses caused by natural disasters,” Vilsack said. “It's a reminder that Congress must do the same, and pass a comprehensive, multi-year Food, Farm and Jobs Bill that provides greater certainty for farmers and ranchers in the season ahead. Providing the tools and certainty they need is the least we can do for those who grow our food, fiber, feed and fuel, even through the most challenging of times.”

 

To read the full farm income forecast, go to http://www.ers.usda.gov/…

 

 

 

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Posted with DTN Permission by Haylie Shipp