The latest U.S.D.A. projections for farm income across the country in 2005 have producers smiling. Last year, net cash farm income set a record of $85.5 billion dollars. For this year, while not a record, net cash farm incomes for this year are projected to be close to that level & around $85.2 billion dollars. So U.S.D.A. Chief Economist Keith Collins, what are some factors for the booming income?
COLLINS: Crop and livestock receipts again being very close with the 2004 level. We are seeing some pull back of production, we expect, in 2005 from major field crops. We've also seen lower prices because of last year's record crops. As a result of that, some crops like corn will see lower receipts but on the livestock side again we're looking for a very strong livestock sector. Cattle receipts up over two billion dollars above the 2004 level, and that's again still without the Asian markets being open to U.S. beef.
Now it definitely could be a better year for growers if it weren't for a couple of reasons. Collins points out that lower crop production is expected this fall, and that should translate in the following&
COLLINS: Our measure of the net value of production which we call net farm income will show about a thirteen per cent decline, but because farmers have large crops in storage from the record 2004 crops, they will be marketing those in 2005, and so net cash farm income in 2005 will be just about the same as 2004.
Now that final number could vary as various inputs such as fuel and fertilizers continue to increase. For example, in 2004, fuel inputs increased twenty four percent. And Collins says that figure could even be higher as recent factors continue to play out.
COLLINS: And once again we show manufactured inputs up eleven per cent and as of the basis of the time we made these forecasts, we were looking at in 2005 fuel expenses being up twenty four per cent. Of course, since we established these numbers, these numbers are based on data prior to Hurricane Katrina, so we haven't taken Hurricane Katrina's effects into account yet, because we're uncertain as to what that will mean over the next six months for gasoline, diesel, and other energy prices.
And Collins also expects another significant increase in fertilizer inputs from 2004 to 2005. Last year, such inputs jumped fourteen per cent from the year before.