Farmers are seeing a much better year than they have in a long time. A Midwestern farm management company says farmers’ income in 2003 was at its highest in almost a decade, and net farm income was at its third-highest level since the firm started collecting data in 1976. Iowa State University Extension Ag Economist Mike Duffy says there have always been some struggling and some farmers doing well whatever the market conditions. When you divide the farms into third, he says every year the top one-third made money, with the exception of 1981, and the low third lose money every year except for the year 1973. It’s not the same farms every year, he point out, just the average of all farmers and how they fare. Duffy says farm payments are an important factor in the income of farmers in Iowa and Nebraska, “the commodity states,” and he says one big reason for the change in farm income is the shift from the old to the new federal farm program. It calculates federal farm payments in a different way, though Duffy says that’s not a bad thing for producers. Duffy says we’ll see the support payments continue to dwindle because in the new farm bill they have a “counter-cyclical” basis, and with prices rising for commodities, the payments go down. When prices are low the farm payments are high, he explains, and then when market prices for commodities go up, the federal farm-support payments shrink end completely. Duffy says it’s a strategy designed to get aid to producers who really need it. The agricultural economist says it’s likely prices for grain, beef and dairy products will continue to increase, though a lot of that strength in prices will depend on finding global markets for U.S. commodities. We are in a world market, he says, and what happens in that structure will have significant influence on prices we see. Duffy says in the 20th century the problem for American farmers has been not under-producing but over-producing, and when we do that, prices go down. Nebraska Farm Business Incorporated reported this week that rising crop and livestock prices and improved crop yields pushed the net income of farms they survey to 65-thousand dollars in 2003.
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