- Net farm income in 2011 is expected to increase by 20 percent over the 2010 forecast. Average family farm household income is forecast to be up 4 percent over 2010 to $86,352.
- The 2011 forecast is the second highest inflation-adjusted value for net farm income recorded in the past 35 years. Cash receipts are expected to increase 9.1 percent, with cotton, soybean, wheat, and corn receipts showing the largest gains.
- Agriculture Secretary Tom Vilsack noted that while the report is positive, especially for producers of grains and fiber, it is a concern that farmers continue to face an increase in expenses for key inputs, including feed, fertilizer and fuel.
Net U.S. farm income is forecast at $94.7 billion in 2011, up $15.7 billion from 2010, despite a $20-billion jump in production expenses, according to a report from USDA’s Economic Research Service.
The 2011 forecast is the second highest inflation-adjusted value for net farm income recorded in the past 35 years. Cash receipts are expected to increase 9.1 percent, with cotton, soybean, wheat, and corn receipts showing the largest gains.
The value of the farm sector’s equity (net worth) is forecast to rise 6.8 percent in 2011. The estimated increase in farm sector equity is largely due to an estimated 6.3 percent increase in the value of farm business real estate.
Farm asset values are expected to have the largest percentage increase since 2007. With modest increases in debt, inflation-adjusted equity should exceed 2007peak levels.
The farm business sector’s debt-to-asset ratio is expected to decline from 11.3 percent in 2010 to 10.7 percent in 2011, and the debt-to-equity is expected to decline to 12.8 percent in 2010 to 12.0 percent in 2011. This indicates that the farm sector’s solvency position remains strong.
In 2011, average family farm household income is forecast to be up 4 percent over 2010 to $86,352. Both farm and off-farm income are forecast to be up in 2010 and 2011, compared to the previous years and compared to the five-year average for 2005-09.
“Today’s report predicting strong financial performance in the agriculture sector for 2011 is good news for producers and indicates that economic improvement is under way in much of rural America, Agriculture Secretary Tom Vilsack said.
“Potential record or near record prices for commodities like corn, wheat, soybeans and cotton reflects the fact that our trading partners continue a strong demand for food and fiber produced by America’s farmers. President Obama has called on America to ‘win the future’ and today’s report is an indication that our farmers continue to be the most productive in the world.
“I am heartened that net farm income is projected to increase about 20 percent, or almost $16 billion, from the previous forecast. That’s the second highest figure since the mid-1970’s. Or as we stated in the briefing room the second highest inflation-adjusted value for net farm income recorded in the past 35 years.
“Also, farm asset values are up and farm household income for 2010 and 2011 is expected to increase after falling in recent years. The increase in income is accompanied by a corresponding drop in government payments to the lowest figure since 1997. This shows that the safety net, which helps producers in times of low commodity prices, is working as intended.
“While overall the report is positive, especially for producers of grains and fiber, it is a concern that farmers continue to face an increase in expenses for key inputs, including feed, fertilizer and fuel. Additionally, after a strong recovery in 2010, the report projects a revenue decline for livestock farm businesses in 2011 and continued income and loan repayment concerns for dairy farmers. Higher feed costs are a primary factor.
“Still, the report’s projection that net cash farm income will exceed the recent historical high of 2005 is an indication that America’s overall farm economy is improving, especially in the Heartland and in the Mississippi River region. The Obama administration has focused on helping farmers and rural small businesses find profitability in the marketplace and success in the global economy. Today’s report is an indication that effort is succeeding.”
To read the report click here.