U.S. Farm Income, Randy Schnepf, Specialist in Agricultural Policy. December 10, 2012
“According to USDAs Economic Research Service (ERS), national net farm incomea key indicator of U.S. farm well-beingis forecast at $114 billion in 2012, down 3.3% from last years record, but still the second-highest total on record. In addition to near-record farm income, farm wealth is also at record levels. Farm asset valueswhich reflect farm investors and lenders expectations about long-term profitability of farm sector investmentsare expected to rise nearly 7% in 2012 to a record $2,540 billion for a fourth consecutive year of gains. Farm land cash markets have continued to see gains related to strong crop prices in 2012. Since 2008, farm asset values are up 26% while farm debt has risen by only 10%. As a result, the farm debt-to-asset ratio has declined steadily since 2008 and is expected to fall to 10.5%, its second-lowest level since 1960. The 2012 outlook for a second year of strong farm income occurs in spite of slow growth in the domestic economy and the most severe and extensive drought in at least 25 years. The ongoing drought is expected to destroy or damage a significant portion of the U.S. corn and soybean crops, with deleterious impacts on all U.S. livestock sectorscattle, hogs, poultry, and dairyand with the potential to affect food prices at the retail level. Yet, drought induced large increases in the value of this years crops, plus substantial crop insurance indemnity payments, are expected to more than offset rising production expenditures for both crop and livestock activities and generate record farm income.”
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