ERS forecasts high farm income, but Vilsack warns many struggle with drought
August 28, 2012 | 06:44 PM
The Agriculture Department's Economic Research Service forecast today that farm income would rise this year despite the drought, but Agriculture Secretary Tom Vilsack warned that while the figures showed that overall agriculture is “resilient,” they mask the problems that individual farmers are facing in the drought.
Vilsack also noted that he and President Barack Obama are still calling on Congress to pass a new farm bill.
Net farm income is forecast to be $122.2 billion in 2012, up 3.7 percent from last year, ERS said. Net farm income, at $139.3 billion, is forecast up 3.4 percent from 2011, while net value added is expected to increase by $5.9 billion in 2012 to $172.6 billion.
Despite the severity of the 2012 drought, shortfalls in marketing year production do not necessarily have a detrimental impact on sector-wide farm income, ERS noted. Shortages raise the prices farmers receive for crops sold in calendar year 2012, and crop insurance partially offsets the impact of lower yields.
As a result, in 2012:
- All three major measures of farm income are expected to achieve all-time nominal record highs. Inflation-adjusted net farm income is the second-highest since 1970.
- Crop receipts are leading the 2012 income increase, with strong gains in corn, soybean, hay, and wheat sales reflecting higher commodity prices. A large anticipated rise in other farm income reflects large increases in crop insurance indemnity payouts.
- A decline in dairy sales is forecast, reflecting expectations of lower farm prices for milk.
- Government payments paid directly to producers are expected to total $11.1 billion in 2012, a 6.3-percent increase from $10.4 billion paid out in 2011.
“As we consider today's farm income forecast, it is important to understand and remember that thousands of farm families, particularly livestock and dairy producers, continue to struggle with drought,” Vilsack said in a statement. “Today’s forecast gives us an early indication that American agriculture as a whole is resilient, thanks to producers’ ability to innovate, reduce their debt and capitalize on expanding market opportunities.”
“However, while strong farm income is a positive factor in carrying farmers and ranchers through a challenging time, we must ensure that all producers have the tools they need to be successful in the long term,” Vilsack added. “That’s why President Obama and I continue calling on Congress to pass a comprehensive, multi-year ‘Food, Farm and Jobs Bill’ that will continue to strengthen American agriculture in the years to come, while providing more certainty for farmers and ranchers.”