U.S. farm income will plummet in 2009
USDA predicted last Thursday that farm income would plunge by 38 percent this year to just $54 billion.
The decline, according to USDA economists, is due to the recession which has rippled around the world and impacted demand for goods and services in virtually every nation in the world.
According to USDA, the drop from last year’s record grain price levels means that farmers will see their incomes slump by as much as $33.2 billion this year. Net farm income in the U.S. during 2008 set a new record at $87.2 billion. The new forecast shows current year net income $9 billion below the 10-year average of $63.2 billion.
“With economic conditions deteriorating worldwide, demand for exports has tailed off, with few options available to expand marketing elsewhere,” USDA said in its report. “Sharply declining demand in 2009 has forced farmers to accept prices that are lower than were expected earlier in the year when production plans were made.” Net farm income is a US- DA measurement of the value of production during the calendar year, whether it is sold or held in storage.
The USDA said cash receipts for most crops are expected to drop by $40.3 billion, led by a 19.6 percent cut in corn receipts. Livestock, dairy, and poultry cash receipts are forecast to drop by 15.7 per cent to $119 billion. Crop receipts would still be the second-highest on record in 2009, despite an $18 billion drop to $165 billion. One positive in the farming sector is that expenses are forecast to decline from a record high posted last year, marking the first time costs have dropped since 2002. Overall, expenses are expected to edge lower by $9.2 billion, or 3.2 percent, in 2009 to $280.8 billion, the second highest level ever. The government also said direct government payments are expected to total $12.6 billion in 2009, a slight increase from $12.2 billion in 2008. This would be 20 percent below the 2004-2008 average. — WLJ