Net farm income rebounds, up 31% from prior year

After a sluggish 2009, USDA’s Economic Research (ERS) reported Tuesday that net farm income is making a dramatic recovery. For 2010, the NFI is forecast at $81.6 billion, up 31% from 2009, but $5.9 billion below its all-time nominal record in 2004. Net cash income, at $92.5 billion would be a nominal record, 2.3% above the prior record attained in 2008. Net value added is expected to increase by almost $20 billion in 2010, to $132.0 billion.

The 2010 forecast represents a10.4% increase in cash receipts from sales of farm commodities. In 2010, the rise in the value of livestock production (16.6%) is expected to be more than five times the rise in the value of crop production (3.1%).

Crop receipts are expected to increase $9.4 billion with cotton, soybean, and corn receipts expected to show the largest gains. Livestock receipts are expected to increase $20 billion in 2010, led by surges in cash receipts for dairy and hogs.

Total expenses are forecast to increase moderately, by 2.0% higher, reversing the 4.1% drop in 2009. This is in stark contrast to the 15.7-and 8.8% increases in production expenses recorded in 2007 and 2008. Since 1999, prices paid for seeds have risen 146%, with 64% of that rise occurring during 2007-09. The price increases are forecast to end, at least temporarily, in 2010, with prices paid for seeds going down 3.9%. Fertilizer expenses are slated to fall significantly for a second straight year, declining $2.0 billion (10.1%) in 2010. For pesticides, another decrease of around $400 million (3.6%) is predicted in 2010 as prices paid for pesticides fall 2.7%. After falling 34% in 2009, annual average prices paid for fuels are forecast to be back up 23% in 2010.

Government payments are forecast to be $12.4 billion in 2010, a 1.5% increase from last year. Direct payments are forecast at $4.81 billion for 2010, dropping slightly due to producers receiving $430 million in revenue insurance payments from the ACRE program. Countercyclical payments are forecast to decrease by 82% from $1.17 billion in 2009 to $210 million in 2010. Marketing loan benefits are projected at $120 million in 2010, down 89% from 2009 levels. Price-sensitive crop and milk commodity program payments are expected to decrease by a combined $2.3 billion in 2010. Other government payments are expected to increase by $2.5 billion led by a nearly $2.2 billion increase in disaster assistance payments. For more details, go to:
http://www.ers.usda.gov/Briefing/FarmIncome/nationalestimates.htm.