Net farm income holds steady

Net farm income holds steady. I’m Greg Martin with today’s Line On Agriculture.

In general, profits stayed fairly flat for Oregon's farmers and ranchers in 2008, according to newly released statistics on net farm income. What could have been a great bottom line last year for farmers and ranchers was negated by a rapid increase in expenses. That summarizes Oregon's net farm income for 2008 says analyst Brent Searle of the Oregon Department of Agriculture.

SEARLE:  There was very little change from the previous year. We did see the value of agriculture go up. Crops did reasonably well. Livestock was pretty flat. But expenses outpaced income and it put the net bottom line pretty much the same as the prior year.

The numbers from USDA's Economic Research Service show Oregon with a net farm income of 861 million dollars, which is a 12 percent drop from the five year average. On the expense side, the cost of fertilizers, pesticides, petroleum, and electricity has gone up significantly for producers. But those expenses are overshadowed by labor.

SEARLE:  We look at the biggest cost input for farmers, which are employment costs, now totaling over a billion dollars. That's the first time that's broken that mark, up a little over three percent from the prior years, combined totaling over 40 percent of total input costs, labor alone.

The price paid to producers for certain key commodities this year is down, especially for grass seed, nursery stock, milk, and blueberries. And past experience shows that expenses do not decline as fast as income. Searle says Oregon agriculture's balance sheet for 2008 shows that expenses outpaced the money farmers and ranchers were payed for their products.

SEARLE: Value of production was up five percent from the prior year but input costs- what farmers pay to produce their crops and livestock- was up over seven percent and 26 percent over the five year average

Searle says current prices paid for some key Oregon commodities are down significantly and that could result in a notable drop in this year's net farm income when it is calculated in 2010.

SEARLE: We know from past experiences that expenses do not decline as fast as income does. So we will see a real squeeze in 2009.

That’s today’s Line On Agriculture. I’m Greg Martin on the Northwest Ag Information Network.