U.S. Farm Income Drops

Given the rough economic times challenging everyone, high fuel costs, drought, insect infestations, trade restrictions, and media labeling of a certain flu, it is not all that surprising the farm incomes dropped this year. Still though, the Central Valley Business Times is reporting that “Fewer than 5 percent of farms saw an improvement in income this year, a drastic downturn compared to the same time last year when one in four farms saw better year over year income, according to a survey by Rabobank N.A., a unit of Rabobank Group of The Netherlands.”

Acreage does not factor in when measuring the distress U.S. farmers have over their income. 40 percent think their income will be even worse next year, while only 27 percent think it will improve. “Additionally, higher input costs continue to be the most frequently mentioned economic challenge facing U.S. farmers, says Rabobank. Three in five farmers rank it the primary factor that has contributed most to the economic challenge they are confronted with. Additionally there is an increasing concern regarding reduced demand (55 percent) and weather conditions (57 percent).”

Investing in risk management or marketing strategies has helped ease farmer concerns about price fluctuations. While 94 percent remain concerned about fluctuations, the level of concern has dropped. Those extremely concerned about price fluctuations dropped from 62 percent to 48 percent. Further, hiring plans for farms remain “relatively unchanged” as 75 percent of farms expect hiring levels will be the same as they were last year.

As far as purchasing farm equipment goes, plans seem to surround the time the farm has been up and running. For instance, “farms in operation 40 years or more are planning to buy equipment compared to newer farms.” Still, “66 percent of those surveyed have no plans to purchase farm equipment.” Few farmers plan to increase their land size—nine out of ten farms plan to stay the same size. However, five percent of those surveyed plan to sell land compared with two percent in a survey conducted earlier this year.

Here is the methodology of the survey: The study was conducted to measure farmers’ confidence among target farming regions in the United States. An independent survey company conducted 455 computer-assisted telephone interviews in the first half of August 2009. Farmers who owned or operated a farm grossing $250,000 or more in one of three U.S. census regions – the Midwest, Southern and Western United States – were targeted.

To read the Central Valley Business Times article click here.

Posted: 10/02/09