2011 expected to be a good year for farmers

The United States Department of Agriculture is forecasting a good year for farmers, with net farm income projected at $100.9 billion for 2011, up $21.8 billion (28 %) from 2010.

Net farm income reflects income from production in the current year, whether or not sold within the calendar year.

Net cash income, at $109.8 billion, is forecast up $17.5 billion (18.9%) from 2010, and $34.2 billion above its 10-year average (2001-2010) of $75.6 billion.

 Net farm income is a measure of the increase in wealth from production, whereas net cash income is a measure of solvency, or the ability to pay bills and make payments on debt. Net value added is expected to increase by almost $23.9 billion in 2011 to $153.7 billion. Net farm income and net cash income are both projected to exceed $100 billion for the first time in 2011. However, the rates of increase in both income measures show slight decreases from the previous year. The 2011 inflation-adjusted forecasts of net value added of agriculture to the U.S. economy and net cash income are the highest values recorded since 1974.

“Today’s farm income forecast shows that the American brand of agriculture continues to be a bright spot in our nation’s economy,” said  Agriculture Secretary Tom Vilsack. “Following on a strong 2010, all three measures of farm sector earnings again experienced strong growth in 2011. This is good news for rural America and for our national economy.”

Vilsack pointed out that a combination of factors led to the positive forecast, including “growth in cash receipts, off-farm employment, and a record high of $137.4 billion in FY 2011 farm exports — which continues U.S. agriculture’s year over year trade surplus.”

“A strong U.S. agricultural economy means more opportunities for small businesses owners and jobs for folks who package, ship, and market agricultural products. Our farmers and ranchers have worked hard to keep their debt low and to capitalize on a broader economic recovery. Their willingness to adapt, innovate and embrace new research and technologies has ensured their success and can be a blueprint for the rest of the country’s economic recovery,” the secretary added.

The USDA expects a more than 16-percent increase in sales of crop and livestock by U.S. farm operations in 2011, with gains spread out among many different categories.  Crop sales are expected to exceed $200 billion for the first time in U.S. history, with record or near-record levels across different crop categories.  Livestock sales are predicted to rise almost 17 percent, with double-digit increases across most categories, especially red meats.

Total production expenses are forecast to jump about $34 billion (12 %) in 2011 to nearly $320 billion, driven by increases in input prices. Government payments are forecast to be $10.6 billion in 2011, a 14.4 % decrease from 2010. California farmers received among the least amount of government payments of any state in the nation.

Cotton receipts in 2011 are expected to rise to almost one-third above their 2010 level. U.S. cotton exports are forecast to account for the lowest share of global trade in the past 10 years. The 2011 U.S. cotton crop is forecast 8 percent below 2010, and U.S. demand in marketing-year 2011 is expected to be the lowest since the 1999 marketing year. U.S. cotton producers are expected to receive 89 cents per pound on their lint sales and $237.67 per ton on their sales of cotton seed in 2011.

Double-digit increases in quantities sold are expected for avocados, almonds, walnuts, and cranberries in 2011. Double-digit declines in quantities sold are expected for pecans and lemons.

Overall, fruit and tree nut sales are predicted to rise over 3 percent as the average price for fruit and nuts increases a little over 3 percent. Almonds have benefited from a record-breaking harvest. However, pecan production has suffered from drought conditions.

Large anticipated price increases in 2011 are expected to generate strong sales for U.S. livestock. Drought has continued to play a major role in U.S. beef cattle markets. Exports of U.S. beef are up 27 percent from last year. Dairy receipts are expected to increase by more than one-quarter as milk prices received by dairy farmers rise to more than $20/cwt.

After falling $12.0 billion (4.1 percent) in 2009 and rebounding a relatively modest $4.5 billion (1.6 percent) in 2010, total production expenses are set to rise $34.4 billion (12.0 percent) in 2011 to a nominal record $320.0 billion. The 2011 jump resembles the large increases in production expenses in 2007 and 2008. This is the first time that expenses will have exceeded $300 billion. When adjusted for inflation, 2011 expenses also set a record, surpassing the previous peak reached in 1979.