10/17/07 Net Income Drops

Net Income Drops. I'm Greg Martin with today's Line On Agriculture. Last year's gross income for Oregon farmers and ranchers reached an all-time high, but expenses increased at a greater rate. The result is a slight decrease in net farm income. The latest statistics released by the U.S. Department of Agriculture show a mixture of good news and bad news when it comes to the 2006 ledger for Oregon's agricultural producers. SEARLE: Our gross farm income was the highest it's ever been in terms of earnings. The expenses were up the highest they've ever been as well and climbing even faster than income. So the net farm income decreased but still was the third highest in history in Oregon. Brent Searle, analyst with the Oregon Department of Agriculture, says last year's net farm income of 875 million dollars is about a ten percent decrease from the previous year and more than 28 percent less from the record setting 2004. Searle is optimistic about this year's net farm income, when it is finalized, because of some extremely high prices paid for several Oregon commodities. SEARLE: 2007 has some really interesting things in store- incredible numbers, I think, for agriculture. We'll probably surpass or at least be near the 2004 record marks for both gross and net farm income. All that despite no expected decrease in expenses. With Oregon's diverse agriculture, the overall net farm income is a mixed bag for producers. Some are doing very well, others are struggling. But the latest number generally indicates the industry is strong and continues to contribute quite a bit to Oregon's economy. Searle says the latest net farm income numbers for Oregon is a mixed bag of economic indicators, including a record setting gross income. But the bottom line is a different story. SEARLE: The income continues to go up. That's the good news. Productivity is still increasing. We're not getting any more land. So this is coming on the same or a decreasing land base. That says productivity is good. But it is costing growers more to get their costs of fuel, fertilizer, seed, employee compensation- all those things are going up at an increasing rate. Searle says net farm income in Oregon is down the past couple of years, but significantly up since the beginning of the decade, when the overall health of the agriculture industry was not as strong. SEARLE: USDA numbers showed a peak all-time high in 2004. Since then, we've seen decreases in net farm income in 2005 and 2006. We're down 30 percent from that high two years ago, in 04, for net farm income- down 10 percent from a year ago. That's today's Line On Agriculture. I'm Greg Martin on the Northwest Ag Information Network.