Earlier last week, the USDA reported that farm operators were forecast to earn $71.8 billion of net farm income in 2005, following two years of record income of $59.5 billion in 2003 and $82.5 billion in 2004.
Income is forecast down in 2005 only because it rose by $23 billion to an unprecedented level in 2004. In that year, both crop and livestock commodities benefited from high prices and/or exceptional production conditions.
The value of production in the U.S. farm sector is forecast to be $269.1 billion in 2005, following record years of $242.6 billion in 2003 and $279 billion in 2004. Farms are forecast to contribute $118.3 billion in net value-added to the U.S. economy in 2005, following record years of $101.2 billion in 2003 and $125.9 in 2004.
Net cash income is forecast to be $85.2 billion in 2005, less than 1 percent lower than in 2004 after record years of $71.6 billion in 2003 and $85.5 billion in 2004.
Government payments are forecast at $21.4 billion, up $8.1 billion from 2004 and the highest since 2000. This increase will more than compensate for lower farm receipts in 2005, and stabilize net cash income despite expenses rising by $7.8 billion.
Smaller crop harvests in 2005 are motivating producers to sell large beginning-of-year crop inventories that were carried over from large 2004 harvests.
The income earned by farm operator households in 2005 will continue a five-year string of increases. Average farm household income for 2005 is forecast at $88,105, up 1.2 percent from 2004.
Earnings from farming are forecast to be less in 2005 than 2004, but this is offset by an increase in earnings from off-farm sources. A forecast increase in government payments and gross cash income is not expected to offset higher expenses.
Source: The Independent