USDA’s estimate for net farm income for the current year surpasses the $100 billion mark for the first time. Net farm income is up 28% over 2010 by a margin of $21.8 billion. That reflects commodities sold in 2011, but many of them were produced in 2010. The forecast of $100.9 billion in net farm income was generated from a 16% rise in crop income and a 17% rise in livestock income. How did your bank account fare, compared to the rest of the country?
Net farm income is a measure of wealth from production. Net cash income is a measure of the ability to pay bills, and it rose as well. Net cash income of $109.8 billion is up about 19% from last year and over $34 billion above the 10 year average.
The data was released by USDA’s Economics Research Service (ERS), which says there were record or near-record sales and price levels of many crop and livestock commodities compared to 2010. Among those was a 30% increase in wheat sales at an average price of $7.43 per bushel. While corn production was high, so were prices and they were up by one-third to $6.04 for the year. ERS reports soybeans increased slightly in sales with an average price of $12.89.
While commodity price increases help farm income, production expenses rose over $34 billion in 2011 to a record of $320 billion, and the first time they have exceeded $300 billion. The economists report a 12% increase in inputs, taxes, interest, and wages, but the quantity of inputs used declined more than 4% for crops and increased only 1% for livestock. They report that even with the expected increase in expenses, total expenses as a share of gross farm income, at 76%, will be 2% less than last year.
The value of crop production is expected to rise 18.5% and the value of livestock production is forecast to rise 16.6%, with crop expenses up $7 billion from last year and livestock expenses up nearly $19 billion from 2010.
The ERS economists say the principal driver of crop expenses has been changing input prices, but not acreage. Use of pesticides and more expensive seed with complex traits has increased. Also increases in the price of natural gas have contributed to higher prices for fertilizers.
Payments to stakeholders are expected to contribute 16.5% toward total production expenses and total $52.9 billion a more than 4% rise from last year. The expenses are composed of payments for wages, cash rents, and interest to lenders. Rents increased 12% this year, compared to last year.
Government payments totaled $10.6 billion, a more than 14% decrease from last year. Direct payments made up $4.7 billion of that, and represented a decline from the five year average due to enrollments in the ACRE program. 2011 government payments will represent the least amount paid to farmers since 1997.
Record levels will be set in 2011 for Gross Farm Income, Net Farm Income, and Expenses. Net Farm Income will top $100 billion, a 28% increase from last year. Expenses will reach $320 billion, thanks to higher prices for crop and livestock inputs, instead of increased acreage.