Thursday, December 2, 2010

Strong sales propel US farm income to record high

WASHINGTON: The U.S. farm sector is enjoying a broad-based boom, thanks to surging prices and vociferous demand from China, Agriculture Secretary Tom Vilsack said on Wednesday, Dec 1.

U.S. net cash farm income will rise 34 percent to a record $92.5 billion this year, one of the the rosiest years for American agriculture in four decades.

"The recovery we're seeing is sectorwide," said Vilsack, pointing to an upturn in livestock and crop revenue.

Economic distress pulled down farmer income in 2009 from highs set in 2008. Prices rebounded this year, partly due to large soybean and cotton exports to China and the impact of a small wheat crop in Russia.

This year would be the fourth since 2004 when net cash income, adjusted for inflation, soared to levels of the mid-1970s, said USDA. The booming mid-1970s, marked by large sales to the Soviet Union, are the last comparable period of multiple years of high output and income.

Net cash farm income, a measure of solvency, is based on cash receipts and expenses. Farmers can arrange sales and purchases to produce consistent income. Another USDA gauge of financial health, net farm income, includes changes in the value of inventory and is more variable.

USDA said net cash farm income in 2010 would be 2.3 percent above the record set in 2008 and up 34 percent from 2009.

"A second feature of the 2000-2009 decade is the high and persistent levels of volatility in agricultural commodity and input (feed, fuel, and fertilizer) markets," said USDA economists. "The volatility is reflected in the patterns of farm income during the decade.

"Net farm income increased in six of the 10 years, posting an average increase of 26.6 percent in the years with increases in farm income and an average decline of 23.5 percent in the other years (2002, 2005, 2006, and 2009)." For this year, USDA said cash receipts from crops and livestock would rise by 10.4 percent from 2009. Livestock receipts wold increase by $20 billion, led by dairy and hogs. Crop receipts would increase by $9.4 billion with cotton, soybeans and corn showing the largest gains.

Production expenses would climb by 2 percent, to $286.6 billion, and government payments of $12.4 billion would be up 1.5 percent from 2009.

USDA will make its first forecast of 2011 income in February.

Purdue University economists foresee higher expenses for fertilizer, seed, fuel, pesticides and equipment in the new year. In a Nov. 22 report, Purdue said variable costs, which exclude land, would rise by 13 percent for corn, 6 percent for soybeans and 13 percent for wheat in Indiana. - Reuters

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