Cash income picture improved since last quarter, but net farm income at year-end still to finish significantly below 2008.
In its August report, the Economic Research Service of USDA projected net cash income at $68.2 billion. The November 24 report now calls for net cash income to come in at $69.8 billion
Net farm income is forecast to be $57 billion in 2009, down $30 billion (34.5 percent) from 2008. The 2009 forecast is $6.5 billion below the average of $63.6 billion in net farm income earned in the previous 10 years. Still, the $57 billion forecast for 2009 remains the eighth largest amount of income earned in U.S. farming. The top five earnings years have been tightly grouped between 2003 and 2008, attesting to the profitability of farming this decade.
Net cash income, at $69.8 billion, is forecast down $27.7 billion (28.4 percent) from 2008, and $1.8 billion below its 10-year average of $71.6 billion. Net cash income is projected to decline less than net farm income in part because net cash income reflects the sale of $1.0 billion in carryover stocks from 2008. Net farm income reflects only the earnings from production that occurred in the current year.
After reaching record or near-record levels in 2008, all three measures of farm sector earnings are forecast to decline in 2009.
- Net cash income is expected to fall about 28 percent, to a level just below its previous 10-year average.
- Net value added, at $108.4 billion, is expected to fall from a record $135.7 billion in 2008, but remain above its 10-year average. Some of the decline in value of production is offset by the the drop in expenditures for purchased inputs.
- Net farm income, which was a near-record $87.1 billion in 2008, is expected to be $6.5 billion below its 10-year average in 2009 as a result of reduced net value added and increased payments to stakeholders.
Total expenses are forecast to decline for the first time since 2002.
- The 2007 and 2008 increases in farm expenses, at $34.8 billion and $22.5 billion, were the largest year-over-year absolute changes on record.
- The $11.9-billion decline in expenses projected for 2009 would still leave farm expenses 4 percent higher than in 2007.
The 2009 forecast is for a 13 percent decline in cash receipts.
- The $42.1-billion decline represents about half the combined increase of $83 billion that occurred over 2007 and 2008.
- Crop receipts would be the second highest on record in 2009, despite a $19.4-billion drop to $163.6 billion, following gains of more than 20 percent in each of the last 2 years.
- Livestock receipts are expected to decline $22.7 billion (16.1 percent) in 2009.
Government payments are forecast to change little in 2009.
- The projected decline in ad hoc and emergency assistance payments is offset by increases in Milk Income Loss and countercyclical payments.
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