Farm income in U.S. continues to be challenging

Farm income in the United States will continue to be challenged by a confluence of global economic factors – mounting supplies of grain and oilseeds, the U.S. dollar's continued strength and slowing growth in China – through the remainder of 2015 and into 2016, according to the new Quarterly Rural Economic Review from CoBank. With inventories growing, crop prices should stay near their current levels well into 2016, according to the report.

At the same time, those weak crop prices will continue to aid ethanol producers as well as the animal protein and dairy sectors. All three of these industries have suffered their own declining prices of late. Animal protein – beef, pork and poultry – supplies are all on the rise after several years of challenges brought on by drought, higher feed grain prices and disease. In fact, the animal protein complex is now growing per capita meat supplies at the fastest rate in nearly forty years.

"In the face of mounting supplies and downward pressure on prices, U.S. agricultural exports now occupy center stage across the board –  for grains and oilseeds, ethanol, animal protein, and dairy," said Leonard Sahling, manager of CoBank's Knowledge Exchange Division, which produced the report. "The new pricing paradigm will accelerate the pace and scope of supply chain realignments, throughout the entire U.S. agricultural sector. Moreover, we're beginning to see an increased need for access to debt capital as margins narrow further and savings begin to dry up."

Water continues to be a challenge in California where a severe drought is now in its fourth year. Many Californians are convinced that El Nino will be their deliverance, unleashing torrential rains that will end the drought. However, even if an El Nino event does end California's drought, the state's water woes will probably still persist. California will need to get several years of heavier-than-normal annual rainfall just to restore the underground aquifers to the levels where they were prior to the onset of the current drought – much more rainfall than even an exceptionally strong El Nino event will deliver in a single year.

US net farm income forecast to decline in 2012

U.S. net farm income in 2012 is forecast to decline almost $4 billion from its all-time high in 2011, and net cash income is expected to decline almost $2 billion, according to the U.S. Department of Agriculture Economic Research Service's 2012 farm income forecast.
The value of agricultural sector production is expected to increase with gains anticipated for crops, livestock and especially revenues from services and forestry sales. Larger gains are predicted for oil crops and other farm income. However, solid gains in the projected annual value of U.S. agricultural production will be more than offset by increases in purchased inputs and payments to stakeholders, according to the report. In particular, feed expenses are forecast to increase almost $10 billion in 2012.
Agriculture Secretary Tom Vilsack said he is optimistic in spite of some of the numbers. "Today's forecast is heartening," said Vilsack. "It confirms that American farmers and ranchers remained impressively resilient in 2012, even with tough odds due to one of the worst droughts in more than a generation. Thanks to its ability to remain competitive through thick and thin, U.S. agriculture is stronger today than at any time in our nation's history, supporting and creating good-paying American jobs for millions.
"While down slightly from the August forecast, today's estimates for net farm income are the second-highest since the 1970s, while total farm household income is expected to rise," said Vilsack. "At the same time, the positive trend of falling debt ratios continue. The forecast suggests that strong farm income should remain a positive factor in carrying farmers and ranchers into the 2013 growing season."
He said the industry must continue to stand with America's farming families and rural communities, providing help and assistance to those who need it. "This year, the farm safety net showed its mettle and merit, helping to deliver peace of mind to thousands of farmers and ranchers dealing with losses caused by natural disasters," said Vilsack. "It's a reminder that Congress must do the same, and pass a comprehensive, multi-year Food, Farm and Jobs Bill that provides greater certainty for farmers and ranchers in the season ahead. Providing the tools and certainty they need is the least we can do for those who grow our food, fiber, feed and fuel, even through the most challenging of times."

Farm income up 31% in 2010 according to USDA

The U.S. Department of Agriculture (USDA) released its Farm Income Report, which shows a 31% increase in farm income for 2010 over 2009 numbers.
The forecast puts 2010 income at $81.6 billion—26% higher than the 10-year average ($64.8 billion) for 2000-2009. Net cash farm income set a new record at $92.5 billion, 2.3% above the previous record attained in 2008. “Today’s farm income report shows that America’s farmers and ranchers are helping to lead the country’s economic recovery," said Agriculture Secretary Tom Vilsack. "All three measures of farm sector earnings have experienced a rapid rebound in 2010 and other indicators—such as farm asset values—point to a sustainable recovery."
Vilsack said some credit for the positive numbers should be given to the 2008 Farm Bill, the Obama Administration's Recovery Act and increased agricultural exports.

Russian company sells shares, land access

Reports say Russian grain processing firm Pava is seeking Gulf region investors via a share sale. The sale is hoped to raise 100 million euros by granting access to valuable farmland.
The funds would be used to invest in technology and triple the company’s farmland. This move would circumvent Russian law that prevents foreign investors from owning farmland.
The deal could allow Gulf investors to use 1.24 million acres of Russian land to increase their food supplies.

Survey shows US farm income down

Rabobank conducted its Farm & Ranch survey to gauge farmers' confidence among target regions in the U.S. Its research found less than 5% of farms saw an improvement in income this year, a drastic downturn compared to the same time last year when 25% saw better year-over-year income.
"U.S. farmers and ranchers continue to take a consistently conservative position when anticipating future performance, irrespective of the recent market volatility," said John Ryan, president and CEO for Rabo AgriFinance.
Higher input costs continue to be the most frequently mentioned economic challenge facing U.S. farmers. Three in five farmers rank it the primary factor that has contributed to their economic challenges. Additionally there is an increasing concern regarding reduced demand (55%) and weather conditions (57%). Nearly all surveyed (94%) are concerned about price fluctuations.