Net farm income to surge 48%, USDA says>>>
Bloomberg News
August 31, 2007
U.S. net farm income in 2007 will be nearly 48 percent greater than a year earlier, and more than forecast in February, as higher grain and livestock prices offset increased production costs, the government said Thursday.
Net income will reach a record $87.1 billion, up from a revised $59 billion last year, the Agriculture Department said in a report on its Web site. In February the USDA projected net farm income of $66.6 billion for 2007. Cash expenses will rise 8.5 percent, to $222.6 billion, the highest ever.
"This is a great time to be a farmer," said Christopher Hurt, an economist at Purdue University in West Lafayette, Ind. "Farming may be the healthiest sector of the economy."
Average farm household income, which includes off-farm and farm income, will rise 8 percent this year, to a record $86,693. That's 15 percent above the average for the previous five years, the USDA said. Average net cash income is forecast to be $73,800 in 2007, up 23 percent from last year and 25 percent higher than the five-year average.
A rise in agricultural income could boost sales of farm machinery made by companies such as Moline, Ill.-based Deere & Co., and seeds produced by Monsanto Co. and Dow Chemical Co. Farmers will also be able to afford more fertilizer made by companies such as Terra Industries Inc. and Deerfield-based CF Industries Holding Inc., the largest producers of liquid-nitrogen crop nutrients.
The value of all U.S. crop production this year is forecast to rise 14 percent from 2006, to $136.2 billion. The value of production from cattle, hogs, chickens and eggs will increase 18 percent, to a record $140.2 billion.
"The livestock sector is doing considerably better than most people expected earlier this year," Hurt said. He cited production cuts by U.S. egg and chicken producers, falling global dairy supplies and a U.S. cattle inventory near a 40-year low as reasons for the improvement.
"The grain markets have been supported by increased demand for biofuels" made from corn and soybeans, Hurt said.
The average price of corn, the nation's biggest crop, is 62 percent higher this year than a year earlier, and soybeans, the second-largest crop, are 36 percent higher.
Wheat prices, which reached a record high Thursday, are 46 percent higher than a year earlier.
Direct government aid to farmers is forecast to fall 14 percent this year, to $13.6 billion. Payments to farmers averaged $16.9 billion over the past 10 years, the USDA said.
Net cash farm income, which does not include costs such as depreciation and changes in the value of inventories, will be a record $85.9 billion this year, up from $67.9 billion last year and up from a February forecast of $67.2 billion, the department said.
The projected net cash figure is 31 percent more than the average of $65.4 billion over the past decade, signaling loans might be paid down faster and farmers might be able to afford to purchase new equipment and more land.
The farm sector's net contribution to the economy for the year will come to $135.4 billion, up $31.1 billion over last year, the USDA said. |
