Net farm income forecast up 28 percent in 2011
USDA’s recent forecast for net farm income, which reflects income from production, was $100.9 billion in 2011, up $21.8 billion or 28 percent from last year. Net cash income, which only reflects cash transactions, is forecast up by $17.5 billion from 2010 to $109.8 billion, or up 18.9 percent, and $34.2 billion above its 10-year average (2001-2010) of $75.6 billion.
According to USDA, farm income is a measure of the increase in wealth from production, whereas net cash income is a measure of solvency, or the ability to pay bills and make payments on debt.
Net value added is expected to increase by almost $23.9 billion in 2011 to $153.7 billion. Net farm income and net cash income are both projected to exceed $100 billion for the first time in 2011. However, the rates of increase in both income measures show slight decreases from the previous year.
The 2011 inflation-adjusted forecasts of net value added of agriculture to the U.S. economy and net cash income are the highest values recorded since 1974.
• Net farm income is forecast to rise 28 percent in 2011, matching the increase recorded in 2010.
• Net farm income and net cash income are both projected to exceed $100 billion for the first time in 2011.
• USDA expects a more than 16 percent increase in sales of crop and livestock by U.S. farm operations in 2011, with gains spread out among many different categories.
- Crop sales are expected to exceed $200 billion for the first time in U.S. history, with record or near-record levels across different crop categories.
- Livestock sales are predicted to rise almost 17 percent, with double-digit increases across most categories, especially red meats.
• Total production expenses are forecast to jump about $34 billion (12 percent) in 2011 to nearly $320 billion, driven by increases in input prices.
• Government payments are forecast to be $10.6 billion in 2011, a 14.4 percent decrease from 2010.
Crop receipts are expected to rise over 16 percent in 2011, reflecting large anticipated increases in prices, especially for hay, corn, wheat and cotton. Livestock receipts are expected to rise nearly 17 percent, led by strong prices for dairy and red meats. The 2011 forecasts, if realized, will mean record or near-record sales and price levels for many crop and livestock categories and represent substantial increases over last year.
Sales of wheat are expected to increase by almost 30 percent over 2010 levels, reflecting USDA’s forecast of over 1.9 billion bushels sold at an annual average price of $7.43 per bushel. U.S. wheat production for 2011 is expected to decline over 200 million bushels from last year. U.S. wheat use is projected to fall as a decline in 2011 marketing year exports exceeds the increase in U.S. domestic wheat usage. The USDA rice production forecast for crop marketing year 2011 is 23 percent below last year despite an expected average yield increase of nearly 7 percent. Total use of U.S. rice for crop marketing year 2011 is expected to be 13 percent below last year’s record high, with domestic and residual use down about 8 percent from last year’s record. U.S. rice exports for marketing year 2011 are expected to decline 18 percent. U.S. rice receipts are expected to decline almost 14 percent, with the price of U.S. rice averaging $13.69 per cwt. in calendar year 2011.
USDA expects the 2011 corn harvest to be the fourth largest on record. However, U.S. feed and residual use is expected to decline due to declining meat production, especially broilers. Corn exports for marketing year 2011 are expected to fall, with future sales limited by relatively high U.S. prices and strong foreign competition. U.S. corn receipts are expected to increase over one-third in 2011. USDA predicts over 10.3 billion bushels of corn for grain will be sold by U.S. farm operations at an average price of $6.04 per bushel during calendar year 2011.
Soybean sales are expected to experience solid singledigit gains in calendar year 2011. However, expectations are for a decline in U.S. production and exports for the crop marketing year, with export declines especially pronounced in China. Overall, U.S. domestic use of soybean oil is anticipated to rise as higher use for biodiesel more than offsets a fall in edible consumption. A weak outlook for U.S. feed demand means declining U.S. demand for meal. U.S. 2011 marketing year export sales of meal are down 12 percent; however, soybean meal prices are projected lower than the prices of its substitutes and this may encourage U.S. meal exports to developing nations. U.S. soybean farmers are expected to average $12.89 per bushel in calendar year 2011.
Cotton receipts in 2011 are expected to rise to almost one-third above their 2010 level. U.S. cotton exports are forecast to account for the lowest share of global trade in the past 10 years.
The 2011 U.S. cotton crop is forecast 8 percent below 2010, and U.S. demand in marketing year 2011 is expected to be the lowest since the 1999 marketing year. U.S. cotton producers are expected to receive 89 cents per pound on their lint sales and $237.67 per ton on their sales of cotton seed in 2011.
Double-digit increases in quantities sold are expected for avocados, almonds, walnuts and cranberries in 2011. Double-digit declines in quantities sold are expected for pecans and lemons. Overall, fruit and tree nut sales are predicted to rise over 3 percent as the average price for fruit and nuts increases a little over 3 percent. Almonds have benefitted from a recordbreaking harvest. However, pecan production has suffered from drought conditions. U.S. potato prices are expected to average about $9.80 per cwt. in 2011. Expectations of increased potato sales reflect a price increase combined with an expected increase in quantity sold. Despite a small 2011 crop and moderate demand, dry bean receipts are forecast to increase as U.S. dry bean prices average $35.49 per cwt. in 2011, 27.6 percent above 2010.
Large anticipated price increases in 2011 are expected to generate strong sales for U.S. livestock. Drought has continued to play a major role in U.S. beef cattle markets. Exports of U.S. beef are up 27 percent from last year. Dairy receipts are expected to increase by more than onequarter as milk prices received by dairy farmers rise to more than $20/cwt. Large sales increases are anticipated for all three red meat categories, with a large but lesser increase for turkeys and chicken eggs. Hog producers are expected to benefit from strong demand for U.S. pork products, especially from Japan and China. Turkey shipments are forecast to increase 18 percent from 2010. — WLJ