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Farm Net Income Down, Way Down

Mike

Well-known member
U.S. net farm income forecast lower for 2006

Dec 4, 2006 9:36 AM

By Elton Robinson
Farm Press Editorial Staff

U.S. net farm income is forecast to be $58.9 billion in 2006, down from $73.8 billion in 2005, but slightly above the 10-year average of $57.2 billion, according to a report from USDA’s Economic Research Service.

The primary reasons for the anticipated decline are a drop in the value of livestock production and direct government payments combined with an increase in the cost of purchased inputs.

Net cash income is forecast to be $66.6 billion in 2006, a decline from the high levels achieved in 2004 and 2005. Family farm operator household income is expected to decline 0.9 percent in 2006, as the decrease in farm income more than offsets an increase in off-farm income.

Farms are expected to contribute $107.6 billion in net value-added to the U.S. economy in 2006, substantially down from the 2004 peak year of $128.9 billion. Net value added is the sum of net farm income and payments made to agriculture’s stakeholders (lenders, hired labor, and nonoperator landlords).

The value of production in the U.S. farm sector is forecast to be $279.5 billion in 2006, up $4.1 billion over 2005 and well above the 10-year average of $237 billion.

The value of crop production is projected to be up $7.1 billion over 2005, primarily from higher projected corn prices and stronger sales of vegetables, fruits and nuts, and greenhouse/nursery products.

The value of livestock production is expected to be down $4.7 billion from 2005, but still $18.9 billion above the 10-year average. Farm gate prices for most major livestock products are expected to fall from 2005, with milk prices declining the most.

Total direct government payments are expected to be $16.5 billion in 2006, down from the $24.3 billion for 2005. This payment total is nearly 4 percent below the five-year average. Payments under the direct and counter-cyclical program in 2006 are estimated at $5.2 billion, less than a 1 percent increase from 2005.

Total production expenses in 2006 are forecast to rise $11 billion (5 percent) to a record $237.3 billion. The percentage change is less than in 2005, but continues the increase in total production expenses that has occurred in each of the last four years. Since a decrease in 2002, total expenses in current dollars will have risen $43.8 billion (22.7 percent). Through October 2006, prices paid overall for crop sector inputs had risen faster than for livestock sector inputs.

Farm sector equity is expected to rise by about 7 percent in 2006, as the value of farm assets continues to rise more rapidly than farm debt, driven mostly by increases in farmland values. Debt-to-asset and debt-to-equity ratios continue to improve in 2006, compared with the first half of this decade and average performance over the past four decades.

Average farm household income is expected to decline 0.9 percent in 2006 to $80,703, with the decrease in farm income more than offsetting the increase in off-farm income. For every year since 1996, average income for farm households has exceeded average U.S. household income; during 1996-2005, the average difference was 15.2 percent.

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andybob

Well-known member
Western governments have encouraged the production of cheap food and agricultural products,our colleges have taught more 'modern' techniques now known as factory farming, and industrial cropping.
It is unlikely that governments will support any meaningful increase in food prices while the option of cheap imports exists, the strategic value of self-sufficiency eludes the modern politician, the only way foreward for the producer is to work out practical ways to add value to our product and move away from being purely primary producers accepting the going price at auction or that set by traditional direct markets.
 

Sandhusker

Well-known member
You're right, Andybob. We need a checkoff that promotes US beef over our competition and COOL so consumers can actually buy what they are told to buy.

We need trade agreements with beef IMPORTING nations.

We need the USDA to quit playing the role of Central Planner for the big packers and assume the role they are supposed to have on trade - facilitating it. Private businesses could open up more markets that we could export to if the USDA would just get out of the way.
 

Bill

Well-known member
Sandhusker said:
You're right, Andybob. We need a checkoff that promotes US beef over our competition and COOL so consumers can actually buy what they are told to buy.

We need trade agreements with beef IMPORTING nations.

We need the USDA to quit playing the role of Central Planner for the big packers and assume the role they are supposed to have on trade - facilitating it. Private businesses could open up more markets that we could export to if the USDA would just get out of the way.

So consumers can buy what they are told to buy?

You are going to tell consumers what to buy?
:p :lol: :lol: :lol: :lol:

Why is it that they seem to be buying more chicken than 30 years ago. Haven't you been telling them what to buy? Is chicken not your competition or is it just foreign BEEF?
 
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