November 25, 2009

The US Department of Agriculture is now predicting US farmers' net cash income this year will total just US$69.8 billion, about a 28-percent drop from 2008.

Net cash income reached a near-record level in 2008 of US$97.5 billion, "driven by a large increase in the value of crop production," but kept in check by rising costs of inputs, the USDA's Economic Research Service said in its forecast released Tuesday.

"In 2009, crop prices have continued to decline and prices for livestock animals and products have experienced sharp declines," USDA economists said in the report. "With economic conditions deteriorating worldwide, demand for exports has tailed off, with few options available to expand marketing elsewhere."

Although 2009 net cash income will be far lower than last year, it's not as bad as was expected in September, USDA Chief Economist Joe Glauber said Tuesday.

"The current forecast for 2009 net cash income is...up about US$1.5 billion or so from what we were expecting back in September," Glauber said.

That's because the cost of farm production expenses haven't been as high as expected, he said.

Glauber also said he expects income to rise next year, although not by much. He said he doesn't expect much change in cash receipts for crops in 2010, but the livestock industry should do better.

"We are seeing improvement in livestock prices and, hopefully, the whole meat sector will be pulled up," Glauber said.