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Crop, livestock incomes surging -- USDA
When 2011 is in the books, net farm income will be almost 30% higher than it was last year, according to new USDA information.
In all, U.S. farm income is expected to net just shy of $101 billion, $21.8 billion, or 28%, more than in 2010. Net cash income is forecast $17.5 billion higher than last year at $109.8 billion. It's the first year in history, USDA says, that both net farm and net cash income exceed $100 billion for a single year.
"However, the rates of increase in both income measures show slight decreases from the previous year," according to USDA's report released Tuesday. "The 2011 inflation-adjusted forecasts of net value added of agriculture to the U.S. economy and net cash income are the highest values recorded since 1974."
(chart courtesy USDA)
Those higher incomes aren't the only numbers rising, though. USDA's report released Tuesday also shows production costs are expected to rise by almost $35 billion this year, 12% higher than 2010. The 2011 tally -- $320 billion in all -- is also a record-high.
"The 2011 jump resembles the large increases in production expenses in 2007 and 2008. This is the first time that expenses will have exceeded $300 billion," according to the report. "When adjusted for inflation, 2011 expenses also set a record, surpassing the previous peak reached in 1979."
Of those increased expenses, the livestock sector appears to be shouldering more of the load. "Principal expenses" for livestock farmers are expected to have risen this year by 18.5%, versus 14.7% for crop farmers. Combined with the income outlook for both sectors, it makes for a tighter squeeze for the livestock side.
"The value of crop production is expected to rise 18.5% while the value of livestock production is forecast to go up 16.6%, so the increase in expenses will impinge on net incomes of livestock farms more than crop farms," according to USDA.
Much of that squeeze on the livestock sector will come from feed costs. That's because after a couple years of falling, feed expenses have risen by 23% this year. "The rise in the feed prices is due primarily to the forecast jump in feed grain and oilseed prices. The calendar-year price for corn, which constitutes over 90% of feed grains used, is expected to increase 57% in 2011," Tuesday's report shows.
For crop farmers, input costs remain on the rise, and that has underpinned crop income for this year. "Prices for all crop-related inputs are expected to be up in 2011. Acres planted to principal crops will not be a big factor this year, as they are forecast to rise only 0.2%," according to USDA. "Overall, grain and oilseed production should be down almost 6%. However, acres planted to corn, a heavy user of inputs, are forecast to have expanded 3.7 million acres in 2011."