What is in this article?:
All three measures of farm sector earnings are forecast to rise in 2010, rebounding from double-digit declines in 2009.
- Net cash income is expected to rise nearly 34 percent from 2009, and 28.8 percent above the previous 10-year average.
- Net value added, at $132.0 billion, is expected to be up $20 billion from 2009, and will be 22 percent above its 10-year average. An increase in the value of livestock production accounted for almost all of the upward movement in net value added. The value of dairy production is projected to rise by 29.6 percent, meat animal production by 16.4 percent, and poultry/egg production by 9.9 percent.
- Net farm income, while forecast to be $5.9 billion below its all-time nominal record in 2004, has shown a rebound from 2009, a year in which demand for agricultural products fell worldwide due to the global recession.
Payments to stakeholders
Payments to stakeholders, the returns to nonowner capital, are forecast to be $50.4 billion in 2010, $0.6 billion (1.2 percent) higher than in 2009. The increase is due to a projected rise in hired labor and net rent to nonoperators that more than offsets a small drop in total interest expenses. Payments to stakeholders will constitute 18 percent of total expenses in 2010, nearly identical to 2009, and 38 percent of net value added, down from 45 percent in 2009.
Total labor expenses are projected to be about $500 million (1.7 percent) higher in 2010 based on a 1.7- percent increase in wage rates and the lack of change in total output. Employee compensation (hired labor) is expected to climb $650 million (2.6 percent). With cash receipts for the principal commodities that employ hired labor (vegetable, fruit, nut, dairy, and greenhouse/nursery operations) up 12 percent and with higher net farm income, operators will likely be less reluctant to hire workers than they were in 2009.
Net rent to nonoperators should be about $170 million (1.7 percent) higher than in 2009. Cash rent is forecast up 2.0 percent. Cropland cash rents per acre in the most recent Agricultural Land Values and Cash Rents were up 3.0 percent. That increase and the small drop in acres planted account for the cash rent forecast. Following the movement in the value of crop production in 2010, share rent should be up 3.1 percent. Other factors in the forecast equation hold the change in total net rent to less than the movement in the cash and share rent indicators.
Interest expenses are forecast to be down a little over $200 million (1.4 percent) in 2010. Both real estate and nonreal estate interest are predicted to decrease slightly. Both types of debt should decline more than $2 billion, while interest rates fall slightly. Debt and interest rates are discussed in greater depth in the balance sheet section.