9-11 IAN Net Farm Up
Record setting net farm income throughout the United States. How could that possibly be with for example, cornfields dried up like tinder throughout much of the Midwest. With this colossal drought, how could that happen?
The US Department of Agriculture is projecting record-setting net farm income for the year 2012. Is that possible? Let’s listen in on an expert in the agricultural economy, American Farm Bureau Federation Economist Todd Davis. “Their most recent estimate actually shows the net farm income increasing by 4% over last year. I think the greatest surprise is that this is a massive drought and that a lot of people that are not involved in agriculture would be shocked that a drought and net farm income increasing goes together.” The reason that this is not unusual according to Davis is that shortages due to the drought raise the prices that farmers receive for crops. However, Davis continues: “But that doesn’t mean every fireman the United States has increasing net farm income. The livestock sector is actually paying more for feed and their profitability is declining. Dairy has been the hardest hit because their costs have increased and the price of milk is coming down. They are losing money.” Crop insurance pay outs are included in the projection so farmers who might have otherwise gone under due to the drought, will be able to plant another crop next year. “It’s very easy to say that net farm income is a record but we do not want to minimize the damage that has been caused by the drought on the individual farmer. This drought has demonstrated that the risk management tool, crop insurance, works well. What the farm bill has as its major component are tools that supplement and increase the safety net for producers.