Despite the worst drought in decades, a new federal report predicts net farm income will set a record high this year. Back in January, the U.S.D.A. projected income at $92-billion. The new projection is $122-billion.
U.S.D.A. chief economist Joe Glauber says one reason for the increase is big crop insurance indemnity payments due to disaster and drought losses. He says another reason is higher commodity prices.
“We have seen much higher prices than what we were forecasting back in January for the 2012 (season),” Glauber says. “That occurred even before the price increases that we saw since June when the drought started emerging. Since June 1, we’ve seen price projections increase substantially, 30-to-40% for soybeans, corn and wheat.”
Many Iowa corn producers are seeing yields significantly reduced from a year ago. Last year, Iowa’s corn growers hauled in 172-bushels per acre, on average. With harvest just getting underway, some farmers report yields this season of 50 to 60 bushels per acre. While there will be a big increase in crop receipts this year, Glauber says conditions are much worse for livestock producers.
“Livestock receipts are down a bit, 166-billion dollars,” he says. “Certainly, expenses are up and they’re largely led by higher feed costs this year. That’s mainly a livestock issue. We’ve had a little bit of increase on fuels, a little bit of increase on fertilizer, but the main increase is coming on the feed side.”
The agency’s early projected feed price increase was 13-percent, but after the drought hit, prices bounded more than 30% higher.