By DOUG SCHMITZ
Iowa Correspondent WASHINGTON, D.C. — U.S. net farm income this year is expected to plummet 38 percent from 2008 estimates and 15 percent from the 10-year average, the USDA said in its Aug. 27 report, citing “dramatically lower commodity prices and plunging exports.”
“With economic conditions deteriorating worldwide, demand for exports has tailed off, with few options available to expand marketing elsewhere,” the USDA said. “Sharply declining demand in 2009 has forced farmers to accept prices that are lower than were expected earlier in the year when production plans were made.”
According to the USDA’s Economic Research Service (ERS), 2009’s U.S. net farm income is forecast to be $54 billion, which is down $33.2 billion, or 38 percent, from the preliminary estimate of $87.2 billion for 2008.
“The 2009 forecast is $9 billion below the average of $63.2 billion in net farm income earned in the previous 10 years,” the USDA said.
Last month’s estimate is actually 18 percent higher than the USDA’s forecast in March, which said 2009 U.S. net farm income would be $71.2 billion, 20 percent lower than the 2008 preliminary estimate.
“With abundant production and shrinking demand, crop prices have been lower in the 2008-09 marketing year, which includes the 12 months following the 2008 harvest,” the USDA stated as the reason for March’s projections. “With large quantities of most grains and oilseeds available to market, lower prices have pulled down receipts and production value from 2008’s record level. The value of crop production is projected to decline by 9.8 percent in 2009.”
In fact, Chris Hurt, Purdue University extension agricultural economist, said 2009 margins would be a lot lower for crop producers, with average farm income plunging.
“Prices will be more in the $1 billion range or sub-$1 billion – more like normal income for 2009,” he said. “We could see record high yields before we are done with this crop, which means lower prices. Regardless, corn and soybean prices are lower.”
The USDA also said U.S. net cash income, at $68.2 billion, is forecast down $29.4 billion from 2008, and $3 billion below its 10-year average of $71.2 billion.
“Net cash income is projected to decline less than net farm income primarily because net cash income reflects the sale of $1.8 billion in carryover stocks from 2008,” the USDA said.
In 2008, the USDA said the farm sector was “whipsawed by highly volatile domestic and international macroeconomic forces” that were initially favorable to U.S. farmers.
“Prices of both farm commodities and farm production inputs spiked in the first half of the year and then fell in the latter half. The U.S. farm sector is perhaps more intertwined with the world economy than ever.
“Demand arising from both the growing populations and rising incomes in other countries has expanded markets for farm commodities and increased competition for critical production inputs such as fuel, feed and fertilizer,” the USDA added.
Record U.S. net farm income in 2008 was also “driven by a large increase in the value of crop production that was only partially offset by rising costs of production for the farm sector.”
U.S. cash receipts for most crops are expected to drop by $40.3 billion, led by a 19.6 percent cut in corn receipts, the USDA stated.
In addition, cash receipts for livestock, dairy and poultry are forecast to be $119 billion in 2009, down 15.7 percent from 2008, with declines in sales across all major livestock categories.
On the plus side, expenses in the farming sector are forecast to decline from a record high posted in 2008, the first time costs have dropped since 2002. In fact, the USDA said expenses are expected to drop by $9.2 billion, or 3.2 percent, in 2009 to $280.8 billion, the second highest level ever. Statewide, based on the latest 2008 statistics, updated on Aug. 28, 2009, Iowa’s net farm income is $7.026 billion, with total cash receipts for corn at $9.7 billion;
soybeans, $4.8 billion; and hogs, $4.75 billion, ranking the state first in the nation in soybean, feed grain and livestock exports.
Illinois’ net farm income is $5.33 billion, with total cash receipts for corn at $8.87 billion; soybeans, $4.16 billion; and hogs, $9.71 billion.
Indiana’s net farm income is $3.17 billion, with total cash receipts for corn at $3.95 billion; soybeans, $2.43 billion; and hogs, $9.23 million. Kentucky’s net farm income is $1.55 billion, with total cash receipts for horses/mules, $1.08 billion; corn at $6.5 million; and soybeans, $38.3 million. Michigan’s net farm income is about $2 billion, with total cash receipts for dairy at $1.48 billion; corn, $1.2 billion; and soybeans at about $7 million.
Ohio’s net farm income is $1.95 billion, with total cash receipts for corn at $2.07 billion; soybeans, $1.87 billion; and dairy at about $1 billion.
Tennessee’s net farm income is $6.2 million, with total cash receipts for cattle at $5.3 million; soybeans, $3.7 million; and corn, $3.4 million.
The USDA also stated direct government payments are expected to total $12.6 billion in 2009, up from the 2008 $12.2 billion total. To view the report, visit www.ers.usda.gov/Briefing/FarmIncome/nationalestimates.htm |
