Record Levels of Cash Receipts and Income Forecast
in 2008
Mitch
Morehart and James
Johnson
Cash receipts from crops will likely continue
increasing at their record- setting pace, totaling
an estimated $174.6 billion in 2008. Even after
adjusting for inflation (constant dollars), crop
receipts are expected to reach their highest level
since the early 1970s and the second largest amount
on record.
Production and sales of feed grains
and oilseeds will contribute significantly to record-level
crop receipts in 2008. During 2007 and 2008, corn
receipts, forecast at $48 billion, will have more
than doubled, and soybeans receipts will have increased
an estimated 80 percent to $30.5 billion. Cash receipts
for wheat, rice, other feed grains, and hay are
also forecast to increase in 2008.
Higher prices for many program
commodities mean fewer Government transfer payments
through price-dependent programs (counter-cyclical
payments, loan deficiency payments, marketing loan
gains, and certificate exchange gains). Payments
under these programs are forecast at $940 million
in 2008, compared with nearly $6 billion in 2006
and over $11 billion in 2005. After accounting for
direct payments and payments from a variety of programs
that provide conservation, disaster and emergency
assistance to farmers, total government payments
are forecast at $13.4 billion in 2008—a $1.4-billion
increase over the 2007 forecast for payments.
In 2008, total agricultural production
expenses are forecast to increase 8.6 percent to
$279.2 billion. For the third straight year, feed
expenses are forecast to increase more than other
production expenses--over 18 percent--to a record
$45.0 billion. A projected increase in corn and
soybean meal prices largely accounts for the rise
in feed expenses.
Higher fertilizer prices may be
of greater concern to farmers than fuel costs in
2008. Following a $2.7-billion (20.2-percent) increase
in 2007, fertilizer expenses are forecast to rise
another 18.8 percent or $3.0 billion in 2008. Land
rental expenses are forecast to rise more than 16
percent in 2008, following a 10-percent increase
in 2007. Nationally, 30 percent of farmers rent
some farmland, usually for cash, and land rental
is much more common for larger commercial operations.
The 2008 outlook for commodity market receipts,
production expenses, and government payments translates
into record amounts of all three measures of farm
sector income—net value added, net farm income,
and net cash income. Net value added, a measure
of agriculture’s contribution to the U.S.
economy’s production of goods and services,
is forecast to rise to $144.1 billion in 2008. Net
farm income is currently forecast to be about $92.3
billion, $3.6 billion higher than in 2007. Four
of the past 5 years have resulted in nominal record-level
amounts of net cash income, which is forecast at
$96.6 billion in 2008. Net cash income generated
from the production and sale of farm goods and services
has never before exceeded the $90 billion-level
in a single year.
Projected changes in net cash income
vary widely by commodity specialization, location
and size of farming operation in 2008. Average net
cash income is forecast to increase for producers
of all types of crops, except specialty crops. For
most livestock producers, however, average net cash
incomes are expected to fall below levels in 2007.
Projected net cash income in 2008 varies considerably
by size of farming operation. Commercial operations
(sales greater than $250,000), which represent about
11 percent of farms and 75 percent of production,
are expected to experience a 7-percent increase
in average net cash income. Intermediate farms (primary
occupation of farming and gross sales below $250,000),
are expected to have the largest year-to-year increase
in net cash income (20 percent). The remaining 65
percent of U.S. farms are classified as rural residences;
their operators typically earn most of their household
income from off-farm sources. For these operations,
net cash income from farming is forecast to increase
by 8 percent, but will remain negative as has been
the long-term trend.
The value of farm real estate,
which represents more than 85 percent of total farm
assets, is projected to increase by 15 percent in
2008. This rise would reflect the fifth consecutive
year of double-digit increases in land values and
the second largest annual increase of the decade.
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