The USDA Farm Income Forecast paints a bright picture for agricultural profitability this year. Net farm income is forecast at $100.9 billion for 2011, up $21.8 billion (28%) from 2010 while net cash income at $109.8 billion, is forecast up $17.5 billion (18.9%) from 2010, and $34.2 billion above its 10-year average (2001-2010) of $75.6 billion.
Net cash income reflects only the cash transactions occurring within the calendar year. Net farm income is a measure of the increase in wealth from production, whereas net cash income is a measure of solvency, or the ability to pay bills and make payments on debt.
“Today’s farm income forecast shows that the American brand of agriculture continues to be a bright spot in our nation’s economy. Following on a strong 2010, all three measures of farm sector earnings again experienced strong growth in 2011. According to today’s numbers, farmers are earning 28% more for their products than they made last year. And it is making a real difference for America’s farm families, whose household income was up 3.1% in 2010 and is forecasted to increase 1.2% in 2011. This is good news for rural America and for our national economy,” said Agriculture Secretary Tom Vilsack. “A combination of factors has made these numbers possible including growth in cash receipts, off-farm employment, and a record high of $137.4 billion in FY 2011 farm exports—which continues U.S. agriculture’s year over year trade surplus.”
The good times for agricultures boosts the general rural economy as well.
“A strong U.S. agricultural economy means more opportunities for small businesses owners and jobs for folks who package, ship, and market agricultural products. Our farmers and ranchers have worked hard to keep their debt low and to capitalize on a broader economic recovery,” Vilsack said. ‘Their willingness to adapt, innovate and embrace new research and technologies has ensured their success and can be a blueprint for the rest of the country’s economic recovery.”
Net value added is expected to increase by almost $23.9 billion in 2011 to $153.7 billion. Net farm income and net cash income are both projected to exceed $100 billion for the first time in 2011. However, the rates of increase in both income measures show slight decreases from the previous year. 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.
Highlights from the report include:
• Net farm income is forecast to rise 28% in 2011, matching the increase recorded in 2010.
• Net farm income and net cash income are both projected to exceed $100 billion for the first time in 2011.
• The USDA expects a more than 16% increase in sales of crop and livestock by U.S. farm operations in 2011, with gains spread out among many different categories.
• Crop sales are expected to exceed $200 billion for the first time in U.S. history, with record or near-record levels across different crop categories.
• Livestock sales are predicted to rise almost 17%, with double-digit increases across most categories, especially red meats.
• Total production expenses are forecast to jump about $34 billion (12%) in 2011 to nearly $320 billion, driven by increases in input prices.
• Government payments are forecast to be $10.6 billion in 2011, a 14.4% decrease from 2010.