Weak US farm income, agriculture prices seen in 2009

An economic analysis of the agricultural sector conducted by IHS Global Insight warns that US farmers will make a lot less money this season, after seeing profits explode to a record US$89.3 billion in 2008.

"The farm income outlook for 2009 has deteriorated significantly, due to lower commodity prices and cash receipts," said the firm, in an executive summary of the report provided to Dow Jones Newswires on Monday. "Total cash receipts for 2009 are now expected to decline by 9 percent from the 2008 level. Net farm income is expected to decline to US$70.1 billion in 2009."

"Conversely, crops and livestock are now being affected by lower demand, both domestic and export, due to worldwide economic weakness and reduced ability of consumers to pay for food," said the Global Insight analysis.

While fuel and fertiliser costs have declined dramatically, IHS expects prices paid for seed to increase "at a relatively strong pace," in 2009.

"On balance, the overall commodity price declines are expected to benefit farmers in the form of lower production expenses, with total production expenses down 4 percent from last year's record level of just over US$290 billion," said the firm.

The report forecast weaker cash prices for virtually all US crops and livestock in 2009, with the exception of broilers and feeder cattle.