Net farm income to be record high in 2011
USDA is forecasting net farm income to jump 31 percent from 2010 to $103.6 billion. Crop receipts are expected to rise over 19 percent in 2011 compared to 2010 as large increases are expected across a number of crop categories. Livestock receipts are expected to rise nearly 16 percent, led by strong sales of dairy, meat animals, and turkeys. Many different crop and livestock categories are expected to achieve record high sales.
Food grain cash receipts are expected to increase almost 25 percent in 2011, while remaining below their 2008 high. Wheat sales, which are expected to account for 86 percent of 2011 food grain receipts, are forecast to increase almost 37 percent. The price of wheat is expected to jump $2.35 per bushel as the quantity of wheat sold is expected to decline over 5 percent in 2011.
Feed crop receipts are expected to increase almost 37 percent, achieving a record level in 2011. Sales of corn for grain, which are expected to account for almost 86 percent of 2011 feed crop receipts, are expected to increase more than 38 percent in 2011. While the quantity of corn sold in 2011 is expected to decline less than 5 percent, this will be more than offset by an almost $2-per-bushel increase in price. Price increases are also expected in 2011 for barley, oats, and hay.
Receipts for oilseed crops are expected to achieve record highs in 2011 based on soybean receipts increasing over 17 percent. The soybean gains reflect a price increase of $2.76 per bushel, offsetting an anticipated 5.2 percent drop in quantity sold in 2011.
Cotton receipts are expected to rise almost 30 percent in 2011, reflecting large increases in prices for both lint and seed. U.S. mill use is expected to be unchanged from the previous 2 years. However, the 2011 cotton crop will be smaller due to the drought in the South.
Large anticipated price increases in 2011 are expected to generate strong sales for U.S. livestock. Dairy receipts are expected to increase as milk prices received by farmers increase more than $4/cwt. Cattle and calf cash receipts are anticipated to increase despite declining production in 2011, reflecting large price gains as global demand for U.S. beef is expected to remain strong. Hog cash receipts are expected to increase due to large price gains coupled with a small increase in pork production. Broiler cash receipts are expected to increase in 2011, with increases in production and strong broiler export demand.
Production expenses are expected to increase more than $30 billion in 2011 compared to 2010. Total production expenses are set to rise 11.4 percent in 2011 to a nominal record $318.1 billion. The 2011 jump resembles the large increases in production expenses in 2007 and 2008. This is the first time that expenses will have exceeded $300 billion. Despite the increase, when adjusted for inflation, 2011 expenses remain slightly below those in 1979.
Every expense category is forecast to increase in 2011. Feed is expected to rise $9.2 billion; livestock and poultry purchases, $2.4 billion; fertilizer and lime, $5.1 billion; and fuels and oils, $3.2 billion. Seeds, miscellaneous expenses, total interest expenses, repair and maintenance, and net rent to nonoperators should each be up more than $1 billion.
The increase in expenses will affect crop and livestock farms differently. The principal expenses for livestock farms are expected to increase about 18 percent, while the principal crop expenses are expected to increase 15 percent. In addition, since the value of crop production is expected to rise more than the value of livestock production, the rise in livestock-related expenses will impinge on net incomes of livestock farms more than crop farms.