U.S. Farm Income To Set Record

U.S. farm income is expected to increase 19% this year, thanks in part to record high crop prices and livestock, which for the first time will top $100 billion, the government estimated. Another buoyant year is also in sight in 2012 for a agricultural boom that started in 2006, according to USDA.

Receipts from sales of crops are projected to rise by 16% this year, with corn, wheat and cotton seen up more than 30% and livestock revenue up nearly 16%.

“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,” said USDA’s Economic Research Service in a quarterly update.

On the downside, the rate of gain for farm income was slower than in 2010, when net cash income rose by 21%, compared to this year’s 19%. And USDA’s forecast of 2011 net cash farm income, at $109.8 billion, was lower than the $114.8 billion estimated on Aug 31. One reason was rapidly growing production costs — up 12% this year at a record $320 billion, compared to a 2% rise in 2010. In August, USDA estimated costs would rise by 11.4%.

“Every expense except labor and electricity is forecast to increase in 2011,” said USDA, with feed, fertilizer and fuel up by more than 20% each.

Analyst Mark McMinimy of Guggenheim Partners said, “Higher costs may tend to mitigate at least some of the projected higher crop and livestock product prices on net cash farm income in the new year. An Iowa State University analysis said corn growers could face a 15% rise in production costs, aside from land, in 2012.”