Farm income remains solid through combination of factors

Very few business ventures involve the same sort of risks regularly confronted by our farmers and ranchers. When planting a crop, needed tillage is completed and seed is spread out carefully throughout the field being placed entirely in a non-recoverable position, as is the fertilizer, weed control herbicide, etc.

The fuel used is "cast to the winds" too, so to speak, never to be recoverable.

When the crop planting is completed, the "performer" of the task can look back proudly noting all the steps taken to do the job correctly, perhaps even perfectly, with the intention of raising a good crop.

So what, then, will that field produce? Depending largely on weather conditions, that "perfectly prepared" field might produce a bumper crop, or it might get hailed out or dried out and produce no crop at all no matter how impeccably prepared. This aspect of a farm operation makes it a never-ending challenge to keep that farm/ranch business functioning and profitable.

This year -- drought, flood and hail notwithstanding -- is shaping up nationwide to be a favorable one for our nation's ag-economy. Agriculture Secretary Tom Vilsack made the following statement recently on USDA's 2011 Farm Income Forecast, which forecast net farm income at $100.9 billion for 2011, up $21.8 billion or 28 percent from 2010.

"The farm income forecast shows that the American brand of agriculture continues to be a bright spot in our nation's economy. Following on a strong 2010, all three measures of farm sector earnings again experienced strong growth in 2011. According to the most recent numbers, farmers are earning 28 percent more for their products than they made last year. And it is making a real difference for America's farm families, whose household income was up 3.1 percent in 2010 and is forecasted to increase 1.2 percent in 2011. This is good news for rural America and for our national economy.

"A combination of factors has made these numbers possible 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 business 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.

"USDA will continue to maintain a strong safety net, expand bio-based product opportunities and local and regional food systems, and promote greater export opportunities for U.S. agriculture, all designed to increase incomes for America's farm families," the Secretary stated.

The Farm Income Forecast report shows some interesting trends for farm families during the past several years. For example: over the past 20 years, the average gross farm income has exceeded production expenses consistently on our nation's farms. The two figures have been closer together in some years than others, but the charted figures do not show expenses exceeding income during this time -- as had occurred in some years prior.

Crop receipts are expected to rise over 16 percent in 2011, reflecting large anticipated increases in prices, especially for hay, corn, wheat, and cotton. Livestock receipts are expected to rise nearly 17 percent, led by strong prices for dairy and red meats.

The 2011 forecasts, if realized, will mean record or near-record sales and price levels for many crop and livestock categories and represent substantial increases over last year.

Another interesting facet of the agricultural economy is that 2011 USDA farm program payments -- often a contentious issue in Congressional debates -- will be at their lowest level in the past 10 years. Payments including Direct and Counter-cyclical Program (DCP), ACRE, CRP, dairy programs, other conservation programs, etc. will total between $10 and $11 billion this year compared to a total exceeding $24 billion as recently as 2005.

The summer of 2011 will be remembered for its lack of moisture and 100-plus degree days. It might also be remembered for the year our ag economy took a major hit from the weather, but remained resilient anyway demonstrating our farmers/ranchers can "take the heat."

Editor's Note: Doug Niemeir is the County Executive Director for the USDA/Farm Service Agency. Doug may be reached by emailing him at Douglas.Niemeir@ks.usda.gov.