Wednesday, May 5, 2010

Just in from Washington

Farm Income Expected to Increase, While Net Worth Declines in 2010

Washington--The three key indicators of U.S. farm sector income are expected to improve in 2010, according to the United State Department of Agriculture statisticians. Net value added, net farm income, and net cash income, are expected to improve in 2010. Net farm income is forecast to be $63 billion in 2010, up 11.9 percent from 2009.

While the 2010 forecast is $25 billion below the all-time record in 2004 and near record in 2008, it represents a rebound from 2009 when the global recession dampened demand for U.S. crops and livestock. Net value added, USDA’s measure of agriculture’s contribution to the U.S. economy’s production of goods and services, is forecast to rise $6.1 billion and net cash income $5.5 billion.

Adjusting for inflation provides a better way to compare the current health of the U.S. farm sector to longrun trends. While increases are expected in 2010, each of the three farm income measures remain below the most recent 10-year average (measured in constant 2005 dollars). Inflation-adjusted net value added is expected to be roughly 6.4 percent below its 2000-2009 average. Inflation-adjusted net farm income and net cash income will be below the 10-year averages by 13.4 and 7.1 percent, respectively.

The value of farm sector business assets is expected to continue falling in 2010 as expectations for declining crop receipts and continued volatility in agricultural commodity and input markets affect future expected returns on investments in land and other farm capital. Although interest rates are expected to remain low and farm credit available, producers could face tighter credit requirements. Farm sector equity, or “net worth” (farm sector assets minus farm sector debt), is expected to fall 3 percent in 2010, with the value of farm assets declining 3.5 percent and farm debt 6.8 percent.

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