02/16/06 USDA expects drop in `06 farm income

The US Department of Agriculture is looking ahead to the next decade by making some long term projections. Based on today's dollars net cash farm income is expected to drop more than 20 percent this year to about 65 billion dollars, well off the nearly 83 billion in 2005. USDA Chief Economist Keith Collins says its not just energy costs that are to blame for shrinking profits. COLLINS "Farm cash expenses in 2003 were about 188 billion dollars. In 2006 we expect they'll be about 204 billion dollars, a very sizeable increase reflecting increases in interest rates, and most prominently increases in diesel fuel, fertilizer costs, electricity costs, propane, natural gas and other energy costs." USDA also expects a 4.7-billion dollar decrease in the value of crop production, while livestock production is expected to drop by about 2.6-billion dollars. Despite all of this short term pain, Collins says there are bright spots in the long range forecast. COLLINS "We see exports steadily continue to rise. Ethanol becomes a very big demand factor as well as continued growth in exports." Voice of Idaho Agriculture Bill Scott