Net farm income forecast to increase 6 percent in 2013
Net farm income is forecast to be $120.6 billion in 2013, up 6 percent from 2012’s estimate of $113.8 billion.
After adjusting for inflation, 2013’s net farm income is expected to be the second highest since 1973, according to USDA’s recent Net Farm Income report. A return to trend yields would lead to record crop production levels and result in substantial year-end crop inventories. Net cash income—which measures the difference between cash expenses and the combination of commodities sold during the calendar year plus other sources of farm income—is forecast at $120.8 billion, down just over 10 percent from 2012. Even so, 2013’s forecast would be the fourth time net cash income, after adjusting for inflation, has exceeded $100 billion since 1973.
The projected nominal $13.1-billion increase in total expenses in 2013, to $354.2 billion, continues a string of large year-to-year movements that have taken place since 2002, according to USDA reports. In both nominal and inflation-adjusted dollars, 2013 production expenses are expected to be the highest on record. Rent, labor, and feed are the expense items expected to increase the most in 2013.
Farm sector assets, debt, and equity are all forecast to increase in 2013. As in the last several years, increases in farm asset value are expected to exceed increases in farm debt, with farm real estate the main driving force. Confirming the strength of the farm sector’s solvency, both the debt-to-asset ratio and debt-to-equity ratio are expected to reach historic lows.
U.S. Agriculture Secretary Tom Vilsack said the growth in the income numbers needs to be backed by comprehensive farm bill.
“This week’s forecast of a $6.8 billion increase in net farm income is a testament to the resilience and productivity of U.S. farmers and ranchers, and a further sign of the positive momentum they have achieved over the past five years. A six percent increase in this key measure would be the second highest inflation-adjusted amount since 1973, even as agriculture has worked hard to recover from an historic drought and other disasters. I am confident that our farmers and ranchers will continue to show the determination and innovation that has been the hallmark of American agriculture for generations. To help continue their strong momentum, producers and rural communities are counting on Congress to provide a comprehensive, long-term Food, Farm and Jobs Bill that will lend certainty to Federal farm policy—as well as passage of a commonsense immigration reform measure to ensure a stable and dependable agricultural workforce in the years to come,” Vilsack said.
Median farm household income forecast lower in 2013
Projected median total farm household income is expected to decrease by 2.5 percent in 2013, to $66,989. Given the broad USDA definition of a farm, many farms are not profitable even in the best farm income years. Despite high prices for many crops, 2012 was no exception, with a median farm income of -$1,453. With sectorwide net cash farm income forecast to decline in 2013, median farm income is expected to decline by $2,300. Most farm households earn all of their income from off-farm sources—median off-farm income is projected to increase by 1.8 percent in 2013, to $60,659. (Note: Because they are based on unique distributions, median total income will generally not equal the sum of median off-farm and median farm income.) — Traci Eatherton, WLJ Editor