Farm income forecast to set new records, but livestock producers get squeezed by grain prices

The Department of Agriculture predicted today that this year's net farm income will be a record $95.7 billion, 10 percent above last year's total of $86.8 billion. Most of that comes from crops; while livestock receipts are up, meat producers' costs are up, too.

USDA economist Larry Salathe told Bob Meyer of Brownfield Network that crop receipts are up $15 billion and livestock receipts are up $7 billion from February, thanks to “very strong exports, very strong domestic demand, of course supported by ethanol.” But the ethanol-driven increases in grain prices are the major squeeze on livestock producers.

Farm production costs "are also projected to be a record high, $300 billion," Meyer reports. "Salathe says that is a $40 billion increase over last year and comes on top of a $20 billion jump in 2007. Fertilizer expenses are up 58 percent, fuel expenses are 39 percent higher, and feed prices increased too. "Bottom line, increases in crop receipts are well ahead of the increase in expenses but livestock producers are being squeezed." (Read more)

USDA says, "The value of crop production ($188.8 billion) is forecast to exceed the 2007 record by $38 billion, a 25-percent increase. . . . Net cash income, at $101.3 billion, is forecast to be $13.9 billion (16 percent) above 2007, which was the previous record. Net cash income is projected to rise more than net farm income because of the carryover of 2007 crops being sold in 2008." For forecasts from USDA on individual commodities and states, click here.