The last decade will almost certainly be remembered as a golden age of agriculture in the United States. High global demand, a cheap dollar and bumper crops meant farming and ranching did better than many other parts of the economy. It was a welcome rebound for farmers and ranchers, who have worked through a lot of tough times.
Those record highs in farm income may have tempted folks to spend money instead of socking it away. If farmers and ranchers were like many other Americans, they probably would have done just that. But that's not how most of us reacted. Sure, we may have bought some new iron, but much of that was a reinvestment in the business and was replacing some very well-used equipment. As farmers, we know that lean times always come back.
USDA census numbers illustrate how farmers and ranchers have built our balance sheets. The department projects total U.S. farm equity will reach nearly $2.7 trillion by year's end, up more than 20 percent from just $2.2 trillion in 2010. Debt as a percentage of farm assets should fall from 11.8 percent to 10.9 percent, while total assets likely will top $3 trillion, up from $2.5 trillion five years ago. These are some of the best financial ratios for agriculture. Ever.
On the row crop side, we are bracing for what will clearly be tougher times. We know the sector as a whole will register a significant drop in income this year and, if the past is any indicator, very possibly in the next year or two.
USDA projects the nation's net farm cash income will fall to $87.4 billion by year's end, down more than a third from 2012's $137.1 billion. Corn, once $7.63, is just over $3 a bushel now. Wheat, $9.50 a bushel a few years back, is now about $4.50. And the dollar? It's stronger than it's been in years, which makes exports a lot harder to sell.
Even so, our ranching members who survived the worst of the western drought and fought through some of that $7 corn benefitted a couple of ways this past year. Not only were beef supplies tighter, but low prices for grain and alfalfa meant feeding those cattle was a lot easier than before. Calves that were going for $150 per hundredweight five or so years ago were touching $300 this summer. Yet even here, clouds are gathering: Forecasters say this fall will likely see the biggest herd expansion we've seen in 25 years. Prices are bound to fall as a result.
We've no one and nothing to blame for any of this but our own success. Bumper crop on bumper crop makes for a challenging oversupply. The rest of the world, too, has increased production thanks in no small part to the genius of American agronomy.
The bright side is most of us with row crops have insurance to help us manage. And unlike in decades past, the government no longer holds on to those huge mountains of grain. Given a weather event here or somewhere else around the world, grain prices can adjust rather than have us just watch tons of grain come back on the market and kill any price improvement.
We at Farm Bureau have celebrated successes with you and are prepared to face lean times as well. We are working on trying to contain unnecessary regulatory creep. We are working to lower barriers to trade of our products. We are working to promote the story of how good a job farmers and ranchers are doing in being good stewards of our land and our animals. We are working to help keep our members on the cutting edge of technology, as well as at the cutting edge of what the consumer wants.
From a financial standpoint, the next few years are probably going to be a lot different than things were over the past few. But Farm Bureau's mission remains the same: "...to enhance and strengthen the lives of rural Americans and to build strong, prosperous agricultural communities."