U.S. Farm Income Outlook for 2017

. U.S. Farm Income Randy Schnepf Specialist in Agricultural Policy September 7, 2011February 15, 2012 Congressional Research Service 7-5700 www.crs.gov R40152 CRS Report for Congress Prepared for Members and Committees of Congress c11173008 . U.S. Farm Income Summary According to USDA’s Economic Research Service (ERS), national net farm income—a key indicator of U.S. farm well-being—is forecast at a record $103.6$91.7 billion in 2011, up 31% from the previous year’s total of $79 billion and easily surpassing the previous record of $87.4 billion achieved in 20042012, down $6.5 billion (6.5%) from the record total of $98.1 billion achieved in 2011. Record revenues from strong crop markets, coupled with sharp gains in livestock revenues (also record high), are expected to offset a $32.5 billion increase in input costs to account for the forecast higher net returns. The major drivers behind crop markets (forecast up 0.7%, from 2011’s record level), coupled with continued strength in livestock markets (down 0.1% from 2011’s record), are expected to be offset a 4% ($12.5 billion) increase in input costs to account for the lower forecast for overall net returns. The major drivers behind a second year of strong farm income projections are the outlook for near-record U.S. agricultural exports in 2011 (projected up 26% to $137 billion), and continued growth (mandated by federal usage requirements) in the U.S. corn ethanol industry. A recovering global economy (bolstered by particularly strong economic growth in China) is expected to support strong demand for cotton, feed grains, oilseeds, and livestock products. Severe drought in Russia, Kazakhstan, and the Ukraine during their 2010 growing seasons lowered export supplies from those traditional feed grain export markets and helped shift market interest to U.S. feed grains. Meanwhile, continued growth in U.S. corn-based ethanol production and strong livestock prices are expected to push corn and other crop prices steadily higher as they compete for a fixed amount of cropland. As a result, market prices for major program crops are approaching the record or near-record levels achieved in 2008, and have improved the earnings outlook in 2011 for most commodities, but especially for corn, wheat, cotton, and soybeans. Government farm payments are projected down nearly 18% in 2011 at $10.2 billion as high commodity prices shut off payments under the price-contingent marketing loan and countercyclical payment programs. Farm production expenses are forecast up 11% to a record $318 billion in 2011, led by higher fuel and fertilizer costs, and increasing outlays for crop insurance. Livestock producers face record costs for feed and replacement animals, which could diminish their net return prospects. Farm asset values—which reflect farm investors’ and lenders’ expectations about long-term profitability of farm sector investments—are expected to rise nearly 7% in 2011 to a record $2,324 billion following a 6% rise in 2010. Farm land cash markets in early 2011 suggest that land values will continue to see gains related to strong crop prices in 2011. The farm debt-to-asset ratio had been steadily declining since 1998’s value of 16% to a recent low of 10.4% in 2007, before rising to nearly 12% in 2008 and 2009. The ratio is expected to return to about 10.4% in 2011. These data suggest a strong financial position heading into the latter half of 2011 for the agriculture sector as a whole relative to the rest of the U.S. economy. However, there is substantial regional variation. In general, the increase in expenses will affect livestock producers more harshly than crop producers. Cash grain farmers in the Corn Belt and Northern Plains are experiencing record revenues. In contrast, livestock and poultry feeders are experiencing record high feed costs that have narrowed profit margins. In addition, a severe drought in the Southwest extending into the Central Plains and the Southeast has limited grazing opportunities and hay production for cattle ranchers in the affected regions and led to substantial herd liquidation. agricultural exports of $132 billion in 2012, following record exports in 2011 (projected at a record $136.3 billion), and continued strong crop prices driven in part by sustained demand from the U.S. corn ethanol industry. Market prices for major program crops for the 2011/12 marketing year have remained near record levels, and sustain a positive earnings outlook for most commodities, but especially for corn, cotton, and soybeans. Beef and broilers are expected to see record high prices in 2012 (up 9% and 7%, respectively), while egg and milk prices are projected to decline by over 8%. Government farm payments, although projected up 4% in 2012 at $11 billion, are expected to remain relatively small (second lowest total since 1997) as high commodity prices shut off payments under the price-contingent marketing loan and counter-cyclical payment programs. Farm production expenses are forecast up 4% to a record $334 billion in 2012, led by a surge in operating expenses and increasing outlays for crop insurance. Livestock producers face record costs for feed and near-record costs for replacement animals, which could diminish their net return prospects. Crop producers also are expected to confront record high costs for seed, fertilizer, and fuel. Farm asset values—which reflect farm investors’ and lenders’ expectations about long-term profitability of farm-sector investments—are expected to rise nearly 6% in 2012 to a record $2,474 billion for a 4th consecutive year of gains. Farm land cash markets in early 2012 suggest that land values will continue to see gains related to strong crop prices in 2012. Farm debt has been nearly stagnant since 2008. As a result, the farm debt-to-asset ratio has declined steadily since 2008 and is expected to fall to the lowest level on record in 2012 at 10.3%. These data suggest a strong financial position heading into 2012 for the agriculture sector as a whole relative to the rest of the U.S. economy. However, there is substantial regional variation. In general, the increase in expenses will affect livestock producers more harshly than crop producers. Cash grain farmers in the Corn Belt and Northern Plains are expected to experience a second year of record revenues. In contrast, livestock and poultry feeders are experiencing record high feed costs that have narrowed profit margins despite record high wholesale and retail prices for their end products. In addition, a severe drought in 2011 in the Southwest that extended into the Central Plains and the Southeast limited grazing opportunities and hay production for cattle ranchers in the affected regions and led to substantial herd liquidation. The lingering effects of the drought are expected to depress sales of many crops in 2012 through their negative impact on production. Eventual 2012 agricultural economic well-being will hinge greatly on spring crop planting and summer growing weather, as well as both domestic and international macroeconomic factors including economic growth and consumer demand. Congressional Research Service . U.S. Farm Income Contents Introduction...................................................................................................................................... 1 Calendar Year 2011:2012 Farm Income Forecast Up ......2nd Highest on Record ........................................................................ 2 Market Overview....................................................................................................................... 46 U.S. Ethanol Policy Sets the Stage for Higher Commodity Prices ..................................... 46 Financial Crisis Stymies Growth in 2009............................................................................ 46 Economic Growth Restarts in 2010, Slows Again in 2011 ................................................. 6 Various Factors Will Influence 20112012 Market Conditions .................................................... 4 Crop Cash Receipts 7 Cash Receipts ......................................................................................................................... 5... 7 Crops ................................................................................................................................... 69 Livestock ............................................................................................................................. 69 Government Payments............................................................................................................... 8 10 Production Expenses ................................................................................................................. 9 11 Agricultural Trade Outlook ..................................................................................................... 1113 Long-Run Farm Income Projections to 20202021................................................................................. 1315 Farm Asset Values and Debt .......................................................................................................... 1416 Average Farm Household Income ................................................................................................. 1517 Figures Figure 1. Annual U.S. Farm Sector Nominal Income, 1960 to 2011F2012F.............................................. 3 Figure 2. Annual U.S. Farm Sector Inflation-Adjusted Income, 1960 to 2012F ........................ 2..... 3 Figure 23. Monthly Farm-Prices-Received Prices for Major Field Crops, Nominal Dollars ................................................... 3 Figure 3. Monthly Farm-Prices-Received for Major Livestock Products ....................................... 3 Figure 4. Farm Cash Receipts by Source, 1990 to 2011F. 4 Figure 4. Monthly Farm Prices for Major Field Crops, Indexed Dollars ........................................ 4 Figure 5. Monthly Farm Prices for Major Livestock Products, Nominal Dollars ........................... 5 Figure 6. Monthly Farm Prices for Livestock Products, Indexed Dollars ....................................... 5 Figure 7. Farm Cash Receipts by Source, 1990 to 2012F ............................................................... 68 Figure 58. Crop Cash Receipts by Source, 2006 to 2011F 2012F................................................................ 78 Figure 69. U.S. Livestock Product Cash Receipts by Source, 2006 to 2011F2012F................................... 79 Figure 710. U.S. Government Farm Support, Direct Outlays, 1996 to 2011F .2012F ................................... 8 10 Figure 811. Farm Cash Production Expenses by Source, 2006 to 2011F..2012F........................................ 1012 Figure 912. U.S. Farm Gross Revenue, Production Expenses, and Net Income ............................... 10 12 Figure 1013. U.S. Agricultural Trade Since 1940.............................................................................. 1213 Figure 1114. U.S. Agricultural Trade: Bulk vs. High-Value Shares .................................................. 1214 Figure 1215. U.S. Agricultural Export Value as Share of Total Gross Farm Income ........................ 14 Figure 16. USDA Long-Run Farm Income Projections, 2012-20202021 ............................................. 1315 Figure 1317. U.S. Average Farm Land Values, 1985 to 2011F.......................................................... 1416 Figure 1418. U.S. Farm Debt-to-Asset Ratio Since 1960.................................................................. 15 Figure 15. U.S. Ave.17 Congressional Research Service . U.S. Farm Income Figure 19. U.S. Average Farm Household Income, On- and Off-Farm Sources, Since 1960 ............. 16 Figure 16..................................................................................................................... 18 Figure 20. Comparison of Farm to U.S. Average Household Income Since 1960 ........................ 1618 Figure 1721. Ratio of Farm to U.S. Average Household Income Since 1960 ................................... 17 Congressional Research Service . U.S. Farm Income19 Tables Table 1. Distribution of Farms and Value of Production by Farm Size, 20092010 ............................... 1719 Table 2. U.S. Crop and Livestock Revenue ($ Billions) by Source, 2006-2011F2007-2012F ......................... 1820 Table 3. U.S. Farm Production Expenses ($ Billions) by Source, 2006-2011F2007-2012F............................. 1921 Table 4. Annual U.S. Farm Income Since 20042005............................................................................. 2022 Table 5. Average Annual Income per U.S. Household, Farm versus All, 2004-2011F.................. 2123 Table 6. Average Annual Farm Sector Debt-to-Asset Ratio, 2004-2011F 2005-2012F..................................... 2123 Table 7. U.S. Prices and Support Rates for Selected Farm Commodities Since 20052006................... 2224 Contacts Author Contact Information........................................................................................................... 2325 Congressional Research Service . U.S. Farm Income Introduction The U.S. farm sector is vast and varied. It encompasses production activities related to traditional field crops (such as corn, soybeans, wheat, and cotton), livestock and poultry products (including meat, dairy, and eggs), as well as fruits, tree nuts, and vegetables. In addition, U.S. agricultural output includes greenhouse and nursery products, forest products, custom work, machine hire, and other farm-related activities. The intensity and economic importance of each of these activities, as well as their underlying market structure and production processes, vary regionally based on the agro-climatic setting, market conditions, and other factors. As a result, farm income and rural economic conditions may vary substantially across the United States.1 However, this report focuses singularly on aggregate national net farm income and the farm debt-to-asset status as reported by the U.S. Department of Agriculture (USDA).2 Annual U.S. net farm income is the single most watched indicator of farm sector well-being, as it captures and reflects the entirety of economic activity across the range of production processes, input expenses, and marketing conditions that have persisted during a specific time period. When national net farm income is reported together with a measure of the national farm debt-to-asset situation, the two summary statistics provide a quick indicator of the economic well-being of the national farm economy. Two different indicators measure farm profitability: net cash income and net farm income. • Net cash income compares cash receipts to cash expenses. As such, it is a cash flow measure representing the funds that are available to farm operators to meet family living expenses and make debt payments. For example, crops that are produced and harvested but kept in on-farm storage are not counted in net cash income. Farm output must be marketed (i.e., exchanged for payment) before it is counted as part of the household’s cash flow. • Net farm income is a value of production measure, indicating the farm operator’s share of the net value added to the national economy within a calendar year, independent of whether it is received in cash or noncash form. In contrast to net cash income, net farm income includes the value of home consumption, changes in inventories, capital replacement, and implicit rent and expenses related to the farm operator’s dwelling that are not reflected in cash transactions during the current year. Thus, once a crop is grown and harvested it is included in the farm’s net income calculation, even if it remains in on-farm storage. Net cash income is generally less variable than net farm income. Farmers can manage the timing of crop and livestock sales and of the purchase of inputs to stabilize the variability in their net cash income. For example, farmers can hold crops from large harvests to sell in the forthcoming year, when output may be lower and prices higher. Off-farm income and crop insurance subsidies and benefits, both of which have increased in importance in recent years, are not included in the 1 For information on state-level farm income, see the “U.S. and State Farm Income Data,” available as part of the Farm Income Data Files, Farm Income and Costs Briefing Room, Economic Research Service (ERS), USDA, at http://www.ers.usda.gov/data/FarmIncome/finfidmu.htm. 2 For a more detailed discussion of the issues in this report, see the Briefing Room “Farm Income and Costs: 20102012 Farm Sector Income Forecast,” ERS, USDA, at http://www.ers.usda.gov/Briefing/FarmIncome/nationalestimates.htm. Congressional Research Service 1 . U.S. Farm Income Off-farm income and crop insurance subsidies and benefits, both of which have increased in importance in recent years, are not included in the calculation of aggregate farm income. Instead, they are included in the discussion of farm income at the household level. Calendar Year 2011:2012 Farm Income Forecast Up2nd Highest on Record U.S. net farm income is forecast at a record $103.6$91.7 billion in 2011, up 31% from the previous year’s $79.1 billion, and nearly 19% above the previous record of $87.4 billion in 2004 (Figure 1 and Table 4)2012, down $6.5 billion (6.5%) from the record total of $98.1 billion achieved in 2011 (Figure 1 and Table 4) but still the 2nd highest on record.3 When measured in cash terms, net cash income in 2011 is also projected record high at $114.8 billion, up 242012 is projected at $96.3 billion, down 11.5% from last year’s record $92.3 billion. The 2011 outlook for record farm income occurs in spite of only minimal growth in the domestic economy, and is being driven, in large part, by 108.7 billion. When adjusted for inflation (Figure 2), current farm income forecasts remain well below the peak period of the early 1970s. The 2012 outlook for a second year of strong farm income occurs in spite of slow growth in the domestic economy, and is being driven, in large part, by the outlook for tight feed grain and oilseed stocks due to robust agricultural export growth and continued strong demand for corn as a feedstock in biofuels production. Figure 1. Annual U.S. Farm Sector Income, 1960 to 2011F 125 $ Billion 100 75 Net Cash Income 50 Net Farm Income 25 0 1960 1970 1980 1990 2000 2010 Source: USDA, Economic Research Service, “2011 Farm Income Forecast,” August 30, 2011, at http://www.ers.usda.gov/Briefing/FarmIncome/. Notes: All values are in nominal terms, i.e., not adjusted for inflation. 2010 is preliminary, 2011 is forecast. A recovering global economy (led by China) has supported strong demand for feed grain, cotton, and livestock products. As a result, strong international demand for U.S. agricultural products has pushed market prices towards or above their 2008 highs (Figure 2 and Figure 3) and has improved the earnings outlook for most agricultural commodities, but especially for grain, cotton, and oilseed producers. 3 ERS’s 2011 farm sector income forecast, last updated on August 30, 2011, is available at the Farm Income and Costs Briefing Room, at http://www.ers.usda.gov/Briefing/FarmIncome/nationalestimates.htm. Congressional Research Service 2 . U.S. Farm Income 20 100 Rice 16 80 Cotton 12 60 Soybeans 8 Wheat 4 40 $ per pound (cotton) $ per bu. (corn, wheat, soyb.) or $ per cwt (rice) Figure 2. Monthly Farm-Prices-Received for Major Field Crops 20 Corn 0 2002 2004 2006 2008 2010 0 2012 Source: USDA, National Agricultural Statistics Service, August 31, 2011. Figure 3. Monthly Farm-Prices-Received for Major Livestock Products 120 24 95 18 All Milk 70 12 All Hogs 45 $ per cwt (milk) $ per cwt (cattle, hogs, broilers) Cattle, 500+ lbs 6 Broilers 20 2002 2004 2006 2008 2010 0 2012 Source: USDA, National Agricultural Statistics Service, August 31, 2011. Note: cwt = hundredweight or units of 100 lbs. Congressional Research Service 3 . U.S. Farm Income Market Overview U.S. Ethanol Policy Sets the Stage for Higher Commodity Prices Since 2005, crop output and sales have been influenced by the rapid expansion of U.S. corn-based biofuel production, due in large part to strong federal incentives.4 The U.S. corn-ethanol industry has grown rapidly from 2004, when 3.4 billion gallons of ethanol were produced using an estimated 12% of the U.S. corn crop, to 2010 when 13.2 billion gallons were produced using an estimated 40% of the 2010 U.S. corn crop.5 This additional demand has helped to push corn and other crop prices steadily higher since 2005 as they compete for a fixed amount of cropland (Figure 2 and Table 7). The U.S. ethanol sector received a substantial boost in December 2007, when the Energy Independence and Security Act (EISA) was signed into law (P.L. 110-140). EISA greatly expands the mandate for corn-based ethanol use from 10.5 billion gallons in 2009 to 15 billion gallons by 2015.6 biofuels production. USDA forecasts that U.S. stocks of feed grains and soybeans will approach historic low levels relative to demand by the end of summer 2012 as U.S. feed grain demand has exceeded production in all but one year since 2004.4 This persistent trend is primarily the result of five factors: rapid growth of U.S. corn-based ethanol production (whose share of the U.S. corn crop in 2011 exceeded feed use for the first time); limited supply of available U.S. cropland to expand production; prolonged weakness of the U.S. dollar, which has made U.S. agricultural exports competitive in foreign markets despite high prices; strong income growth in China and other international markets, which has increased demand for livestock products and the feedstuffs (feed grains and protein meals) needed to produce them; and a substantial decline in the price responsiveness of both supply and demand in agricultural commodity markets. The convergence of these factors has resulted in falling grain and oilseed stocks, record or near-record prices for most feedstuffs—grains, oilseeds, hay, and pasture—in 2011 and early 2012, and increasingly volatile commodity prices. These factors are expected to persist at least into the summer months of 2012, thus maintaining strong demand for feed grains and strong upward pressure on prices for all commodities that compete for farm land. As a result, market prices have risen toward or above their 2008 highs (Figure 3 and Figure 5), thus improving the earnings outlook for most agricultural commodities, but especially for grain, cotton, and oilseed producers. Since the 2002-2003 period, major commodity prices (at the farm gate) have risen substantially. With respect to major field crops (Figure 4), wheat, soybean, and cotton prices have more than doubled, while corn and rice prices have nearly tripled in value. At its 2008 peak of nearly $20 per cwt, rice prices were four times their 2002-2003 period value of under $5 per cwt. With respect to livestock product prices (Figure 6), hog farm prices have nearly doubled, milk and cattle (500 pound and heavier) prices are up over 60%, and broiler prices are up over 50%. 3 ERS’s 2012 farm sector income forecast, last updated on February 13, 2012, is available at the Farm Income and Costs Briefing Room, at http://www.ers.usda.gov/Briefing/FarmIncome/nationalestimates.htm. 4 See CRS Report R41956, U.S. Livestock and Poultry Feed Use and Availability: Background and Emerging Issues . Congressional Research Service 2 . U.S. Farm Income Figure 1. Annual U.S. Farm Sector Nominal Income, 1960 to 2012F 125 $ Billion (Nominal) 100 75 Net Cash Income 50 Net Farm Income 25 0 1960 1970 1980 1990 2000 2010 Source: USDA, Economic Research Service, “2012 Farm Income Forecast,” February 12, 2012, at http://www.ers.usda.gov/Briefing/FarmIncome/. Notes: All values are in nominal terms, i.e., not adjusted for inflation. 2010 is preliminary, 2011 is forecast. Figure 2. Annual U.S. Farm Sector Inflation-Adjusted Income, 1960 to 2012F $ Billion (Inflation-Adjusted) 150 125 Net Cash Income 100 75 50 25 1960 Net Farm Income 1970 1980 1990 2000 2010 Source: USDA, Economic Research Service, “2012 Farm Income Forecast,” February 12, 2012, at http://www.ers.usda.gov/Briefing/FarmIncome/. Notes: All values are adjusted for inflation using the Bureau of Labor Statistics (BLS), Consumer Price Index (CPI) where 2002-2003=100. 2011 is preliminary, 2012 is forecast. Congressional Research Service 3 . U.S. Farm Income Figure 3. Monthly Farm Prices for Major Field Crops, Nominal Dollars 20 100 Rice 16 80 Cotton 12 60 Soybeans 8 Wheat 4 40 $ per pound (cotton) $ per bu. (corn, wheat, soyb.) or $ per cwt (rice) ($ per unit: bushels, pounds, or hundredweight (cwt)) 20 Corn 0 2002 2004 2006 2008 0 2012 2010 Source: USDA, National Agricultural Statistics Service, January 30, 2012. Note: cwt = hundredweight or units of 100 lbs. Figure 4. Monthly Farm Prices for Major Field Crops, Indexed Dollars (indexed to 2002-2003 = 100) 400 Rice 350 Corn 300 250 2002-2003 = 100 Soybeans 200 150 Wheat Cotton 100 50 2000 2002 2004 2006 2008 2010 2012 Source: USDA, National Agricultural Statistics Service, January 30, 2012. Notes: Monthly prices are adjusted for inflation using the CPI to permit relative comparisons. Congressional Research Service 4 . U.S. Farm Income Figure 5. Monthly Farm Prices for Major Livestock Products, Nominal Dollars ($ per hundredweight (cwt)) 24 Cattle, 500+ lbs 100 18 All Milk 75 12 All Hogs 50 $ per cwt (milk) $ per cwt (cattle, hogs, broilers) 125 6 Broilers 25 2002 0 2004 2006 2008 2010 2012 Source: USDA, National Agricultural Statistics Service, January 30, 2012. Note: cwt = hundredweight or units of 100 lbs. Figure 6. Monthly Farm Prices for Livestock Products, Indexed Dollars (indexed to 2002-2003 = 100) 220 Hogs 190 Milk 2002-2003 = 100 160 130 Broilers Cattle, 500lb.+ 100 70 2000 2002 2004 2006 2008 2010 2012 Source: USDA, National Agricultural Statistics Service, January 30, 2012. Notes: Monthly prices are adjusted for inflation using the CPI to permit relative comparisons. Congressional Research Service 5 . U.S. Farm Income Market Overview U.S. Ethanol Policy Sets the Stage for Higher Commodity Prices Since 2005, crop output and sales have been influenced by the rapid expansion of U.S. corn-based biofuel production, due in large part to strong federal incentives.5 The U.S. corn-ethanol industry has grown rapidly from 2004, when 3.4 billion gallons of ethanol were produced using an estimated 12% of the U.S. corn crop, to 2011 when an estimated 13.9 billion gallons were produced using an estimated 40% of the U.S. corn crop.6 This additional demand has helped to push corn and other crop prices steadily higher since 2005 as they compete for a fixed amount of cropland (Figure 3 and Table 7). The U.S. ethanol sector received a substantial boost in December 2007, when the Energy Independence and Security Act (EISA) was signed into law (P.L. 110-140). EISA greatly expands the mandate for corn-based ethanol use from 10.5 billion gallons in 2009 to 15 billion gallons by 2015.7 In addition, strong export demand through 2007 and the first half of 2008, aided in part by a weak dollar, helped to draw down stocks for major grains and oilseeds to historically low levels, thus supporting higher market prices. Financial Crisis Stymies Growth in 2009 After reaching record net cash income and near-record net farm income in 2008, the U.S. farm economy slowed considerably in 2009 owing to the international financial crisis, falling global demand, and weak commodity prices for most major field crops and livestock products. The economic conditions that arose in late 2008—the global financial crisis, economic recession, rising unemployment, limited credit availability, and plummeting asset values—persisted into 2009 and contributed to a severe weakening of consumer demand through most of 2009. As a result, domestic and international demand for biofuels, as well as meat and dairy products (and subsequently feed grain), eroded dramatically. Various Factors Will Influence 2011 Market ConditionsEconomic Growth Restarts in 2010, Slows Again in 2011 After some initial growth in 2010, the U.S. economy has slowed considerably again in 2011, with minimal job growth since 2008. As a result, U.S. consumers have been very cautious in their spending behavior. However, robust economic growth in major global markets in 2010 and early 2011 (including China, India, Brazil, and other parts of Asia and the Middle East) reinvigorated international consumer demand. When coupled with a weak U.S. dollar and events that occurred in international feed grain markets—drought in Russia, Kazakhstan, and the Ukraine in 2010, plus strong Chinese demand for corn and feedstuffs—U.S. agricultural export values surged in 2010 and are projected to reach an all-time high of $137136.3 billion in 2011 and again in 2012.7 4 For more information, see(Figure 13).8 USDA’s estimates for 2010/2011 marketing-year ending stocks for U.S. corn and soybean fell to near historic low levels relative to expected demand (8.6% and 6.6%), while current-year 5 See CRS Report R41282, Agriculture-Based Biofuels: Overview and Emerging Issues. Ethanol production estimates, Renewable Fuels Association, at http://www.ethanolrfa.org/industry/locations/; corn by CRS based on DOE, Energy Information Agency (EIA) monthly data reports, at http://www.eia.gov/totalenergy/data/monthly/; corn use estimates are from World Agricultural Supply and Demand Estimates (WASDE), World Agricultural Outlook Board (WAOB), USDA, February 9, 2011; available at http://www.usda.gov/oce/commodity/wasde/. 6 For more information, see CRS Report R40155, Renewable Fuel Standard (RFS): Overview and Issues. 7 Outlook for U.S. Agricultural Trade, AES-70, ERS, USDA, August 31, 2011. 5 Board (WAOB), USDA, February 9, 2012. 7 See CRS Report R40155, Renewable Fuel Standard (RFS): Overview and Issues. 8 USDA News Release, No. 0046.12, February 10, 2012. 6 Congressional Research Service 4 . U.S. Farm Income USDA’s projections for 2011/2012 marketing-year ending stocks for U.S. corn and soybeans are near historic low levels relative to expected demand (5.4% and 4.9%, respectively).8 This has 6 . U.S. Farm Income (2011/2012) ending stocks for U.S. corn are projected at 6.3%, the lowest level since 1995. These tight stock projections have been a driving factor in higher grain and oilseed prices as markets attempt to ration the projected limited supply across a range of demand sources. China is the world’s leading importer of soybeans taking a 58% share of global imports in 2010. China added to corn market uncertainty in 2010 when it became a net corn importer after 15 years of net exports. In the first half of 2011, China made additional U.S. corn purchases of 3.7 million metric tons, further sparking market interest. U.S. and global wheat ending stocks are projected at what would otherwise appear as comfortable levels relative to expected demand (36% and 28%, respectively), and the actual supply of wheat in international markets is expected to improve as Russia and Ukraine—both countries are major wheat exporters—have eased export restrictions in response to improved grain production prospects. Perhaps the largest source of uncertainty in international grain markets derives from the unreliability of export policy for countries such as Russia, Ukraine, and India—another potentially large wheat and rice exporter that presently has restrictions on grain exports. limited supply across a range of demand sources.9 U.S. livestock prices for most major species—cattle, hogs, and dairy—also strengthened in 2011, driven in part by a booming export market, tightening domestic supplies, and some modest recovery in U.S. retail demand. Various Factors Will Influence 2012 Market Conditions Global total grain output is projected up in 2011/122012; however, total demand is expected to outpace the increase in supply exceed total production leading to a second year of decline in total global grain stocks.9 In particular, season-ending grain stocks in the world’s eight major exporters are projected to be the smallest level since 2003/04. As a result of USDA’s low corn and soybean ending-stock outlook and the uncertainty surrounding grain supplies in international markets, grain and oilseed market prices will likely be very sensitive to any news regarding possible changes in the supply and demand outlook through the fall harvest season. Livestock prices for all major species—cattle, hogs, poultry, and dairy—also strengthened in 2011, driven in part by a booming export market, tightening domestic supplies, and some modest recovery in U.S. retail demand. Supplies of beef will be limited in 2012 due to tightened supplies of feeder cattle. Rising feed prices since 2009 have tightened feedlot margins. In addition, a severe drought in the Southwest extending into the Central Plains and the Southeast has limited grazing opportunities and hay production for ranchers in the affected region. As a result, substantial herd liquidation has been underway since mid-2011. The ensuing restricted feeder cattle supplies are expected to support U.S. beef prices into 2012 (Table 7). Crop Cash Receipts Grain, oilseed, and cotton prices have surged to record or near-record levels in 2011 and helped to push crop cash receipts to a forecast all-time high of $206.5 billion, up over 19% from 2010 (Figure 5). With respect to the individual crops, receipts for corn and soybeans are projected record large at $62 billion (up 39%) and $39 billion (up 18%) in 2011, while wheat market sales are projected up nearly 37% at $14.9 billion. High cotton prices and increased production are expected to push cotton receipts up nearly 29% to $8.1 billion. Similarly, cattle, hogs, and milk prices have established record highs in 2011 (Table 7) and have helped to push livestock cash receipts to a forecast record of $163.8 billion, up nearly 16% from 8 For more information on this and other current market factors, see CRS Report R41956, U.S. Livestock and Poultry Feed Use and Availability: Background and Emerging Issues . 9 International Grains Council, Grain Market Report, GMR No. 414, August 25, 2011. Congressional Research Service 5 . U.S. Farm Income the previous year’s record (Table 2). The combined value of cash receipts from sales of both crop and livestock commodities is projected at a record $370.4 billion in 2011, up $56 billion (18%) from 2010 (Table 4 and Figure 4), and well above the previous record of $316.7 billion in 2008.10 Figure 4. Farm Cash Receipts by Source, 1990 to 2011F 400 Government Payments Farm-Related Income $ Billion 300 200 Livestock Product Receipts 100 Crop Receipts 0 1990 1995 2000 2005 2010 Source: USDA, Economic Research Service, “2011 Farm Income Forecast,” August 30, 2011, at http://www.ers.usda.gov/Briefing/FarmIncome/. Notes: 201110 The world corn and soybean supply situation for 2012 will hinge on the drought-impacted final harvests of Argentina and Brazil (two of the world’s largest producers of both crops), and the acreage and yield outcomes this spring for U.S. crops. The low U.S. corn and soybean endingstock outlook, coupled with the uncertainty surrounding grain supplies in international markets, will likely drive continued grain and oilseed market price sensitivity to any news regarding possible changes in the supply and demand outlook through both the spring planting season of 2012 and into the summer growing season. If favorable weather persists and good harvests are assured for the fall, it is expected that crop prices will decline from current levels. Supplies of beef will be limited in 2012 due to tightened supplies of cattle. On January 1, 2012, the U.S. cattle inventory was the lowest since 1952. Rising feed prices since 2009 have tightened feedlot margins. In addition, a severe drought in 2011 in the Southwest that extended into the Central Plains and the Southeast limited grazing opportunities and hay production for ranchers in the affected region. As a result, substantial herd liquidation accelerated in the latter half of 2011. Beef prices in 2012 will be supported by the tight supplies of cattle (Table 7). Similarly, high feed costs tightened broiler margins and the ensuing reduced egg sets are expected to lower broiler supply and raise prices in 2012. In contrast, milk and hog prices weakened towards the end of 2011 and are forecast lower in 2012 as milk supplies catch up to demand, and hog supplies are bolstered by continued productivity gains (pigs per litter) that have occurred in the past several years. The eventual 2012 U.S. agricultural economic well-being will hinge greatly on spring crop planting and summer growing weather, as well as both domestic and international macroeconomic factors including economic growth and consumer demand. Cash Receipts Total farm sector cash receipts for 2012 are projected at $395 billion, just off of the 2011 record of $396.1 billion (Table 4 and Figure 7). Farm sector revenue sources and shares include crop revenues (50% of sector revenues), livestock receipts (42%), government payments (about 3%), and other farm-related income including machine hire and custom work (5%). 9 See CRS Report R41956, U.S. Livestock and Poultry Feed Use and Availability: Background and Emerging Issues . International Grains Council, Grain Market Report, GMR No. 417, November 24, 2011. 10 Congressional Research Service 7 . U.S. Farm Income Figure 7. Farm Cash Receipts by Source, 1990 to 2012F 400 Government Payments Farm-Related Income $ Billion 300 200 Livestock Product Receipts 100 Crop Receipts 0 1990 1995 2000 2005 2010 Source: USDA, Economic Research Service, “2012 Farm Income Forecast,” February 12, 2012, at http://www.ers.usda.gov/Briefing/FarmIncome/. Notes: 2012 is forecast. Receipts from crop and livestock product sales, and government payments, are described in more detail below. Farm-related income includes income from custom work, machine hire, agritourism, forest product sales, insurance indemnities, and cooperative patronage dividend fees. Crops Sales of field crops (i.e., feed, food, oil crops, and cotton) are expected to rise nearly 29% from 2010 to $138.4 billion. This total includes feed crop (i.e., corn, sorghum, barley, and oats) sales of $71.7 billion, up 37%, food crop (i.e., wheat and rice) sales of $17.3 billion, up 25%, oil crop (i.e., soybeans, sunflowers, rapeseed/canola, and other minor oilseeds) sales of $41.3 billion, up 18%, and cotton sales of $8.1 billion, up 29%. As a result, the crop sector is projected to account for over 52% of total U.S. gross cash receipts in 2011 (Figure 4). Livestock In terms of the value of production, the livestock sector is projected to show strong growth in 2011, with record-high cash receipts of $163.8 billion, up 16% from 2010 (Figure 6). This compares with 2009’s depressed livestock cash receipt total of $120.3 billion. Higher market 10 For details regarding individual commodity market developments, refer to the monthly commodity outlook reports prepared by USDA’s Economic Research Service (ERS), available at http://www.ers.usda.gov/Publications/Outlook/. Congressional Research Service 6 . U.S. Farm Income prices are projected for most major livestock categories, particularly milk (up 25%), hogs (up 18%), choice steers (up 17%), and eggs (up 2%) in 2011. Only broiler prices are projected lower, down 2%. The early outlook for 2012 projects cattle price up due to herd liquidation and tightening supplies, while milk prices are projected 10% lower as supplies recover (Table 7). Figure 5. Crop Cash Receipts by Source, 2006 to 2011F 250 $ Billion 200 Cotton Other Fruit & Vegs 150 Food crops 100 Oil crops 50 Feed crops 0 2006 2007 2008 2009 2010P 2011F Source: USDA, Economic Research Service, “2011 Farm Income Forecast,” August 30, 2011, at http://www.ers.usda.gov/Briefing/FarmIncome/. Notes: 2010 is preliminary, 2011 is forecast. See Table 2 for details. Figure 6. U.S. Livestock Product Cash Receipts by Source, 2006 to 2011F 200 Other 150 Dairy Poultry & Eggs $ Billion 100 Hogs 50 Cattle & calves 0 2006 2007 2008 2009 2010P 2011F Source: See above source and notes. Congressional Research Service 7 . U.S. Farm Income Government Payments Direct government payments are forecast lower by nearly 18%, at $10.2 billion, in 2011, the lowest total since 1997 (Figure 7). Government payments are expected to represent a relatively small share (2.6%) of projected gross cash income of $372.5 billion. In contrast, government payments represent 10% of net farm income of $103.6 billion; however, the importance of government payments as a percent of net farm income varies nationally by sector and region. Figure 7. U.S. Government Farm Support, Direct Outlays, 1996 to 2011F 25 All Other Ad Hoc and Emergency Conservation 20 Price Contingent Direct Payments $ Billion 15 10 5 0 1996 1998 2000 2002 2004 2006 2008 2010P Source: USDA, Economic Research Service, “2011 Farm Income Forecast,” August 30, 2011, at http://www.ers.usda.gov/Briefing/FarmIncome/. Notes: Data are on a fiscal year basis and may not correspond exactly with the crop or calendar year; 2010 is preliminary, 2011Figure 8. Crop Cash Receipts by Source, 2006 to 2012F 200 Cotton Other Fruit & Vegs $ Billion 150 Food crops 100 Oil crops 50 Feed crops 0 2006 2007 2008 2009 2010 2011F 2012F Source: USDA, Economic Research Service, “2012 Farm Income Forecast,” February 12, 2012, at http://www.ers.usda.gov/Briefing/FarmIncome/. Notes: 2011 is preliminary, 2012 is forecast. See Table 2 for details. Congressional Research Service 8 . U.S. Farm Income Crops Total crop sales are projected at a record $198.3 billion in 2012 (up 0.7% from last year’s record. This includes field crops sales (i.e., feed, food, oil crops, and cotton) of a record $132.9 billion (up nearly 3%) and other crop receipts—i.e., fruits and nuts, vegetables, and all other crops—of $65.4 billion (down 3.3%). The field crop sales include record feed crop (i.e., corn, sorghum, barley, and oats) sales of $73 billion (up 33%), food crop—i.e., wheat and rice—sales of $14.8 billion (down 13%), record oil crop—i.e., soybeans, sunflowers, rapeseed/canola, and other minor oilseeds—sales of $37.1 billion (up over 2%), and cotton sales of $7.9 billion (slightly below 2011’s record of $8 billion). Other crop receipts are projected at $65.4 billion (down 3% from the previous year’s record). As a result, the crop sector is projected to account for over 50% of total U.S. gross cash receipts in 2012 (Figure 7). With respect to the individual crops, receipts for corn and soybeans are projected record-large at $63.6 billion (up nearly 8%) and $34.5 billion (up almost 2%) in 2012, while wheat market sales are projected down 16% at $12 billion. High cotton prices offset by lower production are expected to push cotton receipts down by 1% from 2011’s mark of $8 billion in sales. Livestock In terms of the value of production, the livestock, dairy, and poultry sector is projected down slightly in 2012, as record-high cash receipts for livestock (cattle, hogs, and sheep) of $87.6 billion (up over 2%, Figure 9) are muted somewhat by lower dairy receipts of $37.1 billion (down 6.5%), while poultry and egg receipts are essentially unchanged. The early outlook for 2012 projects cattle and broiler prices up due to herd liquidation and tightening supplies, while milk and hog prices are both projected 8% lower as supplies recover (Table 7). Figure 9. U.S. Livestock Product Cash Receipts by Source, 2006 to 2012F 200 Other 150 Dairy Poultry & Eggs $ Billion 100 Hogs 50 Cattle & calves 0 2006 2007 2008 2009 2010 2011F 2012f Source: See above source and notes. Congressional Research Service 9 . U.S. Farm Income Government Payments Government farm payments, although projected up 4% in 2012 at $11 billion, are expected to remain relatively small (second lowest total since 1997) as high commodity prices shut off payments under the price-contingent marketing loan and counter-cyclical payment programs (Figure 10). Government payments are expected to represent a relatively small share (2.8%) of projected gross cash income of $395 billion. In contrast, government payments represent 12% of net farm income of $91.7 billion; however, the importance of government payments as a percent of net farm income varies nationally by sector and region. Figure 10. U.S. Government Farm Support, Direct Outlays, 1996 to 2012F 25 All Other Ad Hoc and Emergency Conservation 20 Price Contingent Direct Payments $ Billion 15 10 5 0 1996 1998 2000 2002 2004 2006 2008 2010 2012f Source: USDA, Economic Research Service, “2011 Farm Income Forecast,” February 12, 2012, at http://www.ers.usda.gov/Briefing/FarmIncome/. Notes: Data are on a fiscal year basis and may not correspond exactly with the crop or calendar year; 2011 is preliminary, 2012 is forecast. Direct payments include production flexibility contract payments enacted under the 1996 farm bill and fixed direct payments of the 2002 and 2008 farm bills; price-contingent outlays include loan deficiency payments, marketing loan gains, counter-cyclical payments and ACRE payments; conservation outlays include Conservation Reserve Program payments along with other conservation program outlays; Ad Hoc and Emergency includes emergency supplemental crop and livestock disaster payments and market loss assistance payments for relief of low commodity prices; and “all other” outlays include peanut quota buyout payments, milk income loss payments, tobacco transition payments, and other miscellaneous expenditures. Payments under the three price-contingent programs (marketing loan benefits, CCP, and ACRE) are expected to fall to a combined $64 million in 2011. CCP payments are forecast at $25 million, while marketing loan benefits are expected to pay out only $8 million in combined loan deficiency payments, marketing loan gains, and certificate exchange gains. Finally, payments $0 in 2012 (down from $25 million in 2011) on the strength of high commodity prices. Payments under the Average Crop Revenue (ACRE) program are forecast at $30 $10 million in 2011, down 2012, same as in 2011 and down from $422 million last yearin 2010. Nearly all of this decline is due to higher cotton and rice prices, as Congressional Research Service 8 . U.S. Farm Income other program crop prices were above program payment triggers for all of 20102011 and are expected to remain so throughout 2011 (Table 7).11 Ad hoc and emergency disaster assistance are projected down slightly in 2011 at $1.4 billion, a 48% decline from 2010. In particular, eligible recipients under the Supplemental Revenue Assistance Payments (SURE) Program are expected to receive $775 million in payments in calendar year 2011. All other disaster programs—including primarily the Emergency Conservation Program, Livestock Forage Program (LFP), Livestock Indemnity Program (LIP), and Noninsured Assistance Program—are functioning at existing statutory authority and appropriation levels. Once a county is declared eligible for disaster relief, producer participation in these programs depends on the extent to which their crop or livestock losses meet a particular program’s threshold. Ad hoc and emergency disaster assistance has figured heavily in farm sector income in most of the years since 1989.12 In particular, the 2008 farm bill (P.L. 110-246) created a permanent fund for disaster assistance, the Agricultural Disaster Relief Trust Fund. Producers in disaster counties who are eligible for Supplemental Revenue Assistance (SURE) payments made from this trust fund began receiving payments in calendar year 2010.13 2012 (Table 7).11 11 For more information on commodity programs, see CRS Report RL34594, Farm Commodity Programs (continued...) Congressional Research Service 10 . U.S. Farm Income Ad hoc and emergency disaster assistance has figured heavily in farm sector income in most of the years since 1989.12 Supplemental and ad hoc disaster assistance payments are forecast to be $1.5 billion in 2012, a 4.7% decrease from 2011 levels. The 2008 farm bill (P.L. 110-246) created a permanent fund for disaster assistance, the Agricultural Disaster Relief Trust Fund. Supplemental Revenue Assistance (SURE) payments from this fund and from the 2009 Recovery Act are expected to amount to $910 billion in 2012.13 All other disaster programs—including primarily the Emergency Conservation Program, Livestock Forage Program, Livestock Indemnity Program, and Noninsured Assistance Program— are functioning at existing statutory authority and appropriation levels. Once a county is declared eligible for disaster relief, producer participation in these programs depends on the extent to which their crop or livestock losses meet a particular program’s threshold. Conservation programs include all conservation programs operated by USDA’s Farm Service Agency (FSA) and the Natural Resources Conservation Service (NRCS) that provide direct payments to producers. Conservation payments grew slowly but steadily from 1998 through 2008 before dipping slightly to $2.8 billion in 2009. Estimated conservation payments of $3.47 billion in 20112012 reflect programs being brought up toward funding levels authorized by current legislation. Farm fixed direct payments, whose payment rates are fixed in legislation and are not affected by the level of program crop prices, are forecast steady year-to-year at $4.7 billion, but are down slightly when compared with about $5.1 billion in 2008. Part of this decline in direct payments may be attributable to enrollment in the ACRE which was authorized by the 2008 farm bill (P.L. 110-246) and provides revenue insurance to producers in exchange for a 20% reduction in their annual direct payment allotments. Production Expenses Total farm production expenses are forecast to rise by about by 11% to $318.1 billion in 2011 (Table 3). However, the $32.5 billion increase remains well below the anticipated $54.1 billion (16%) rise in gross cash receipts, thus contributing to the higher farm income outlook. The otherwise substantial increase in production expenses is the highest level ever (ahead of 2008’s previous record tally of $293 billion). Fertilizer, fuel, feed, and seed costs are all projected up sharply in 2011. In addition, all major categories of “other operating expenses” are also forecast higher (Figure 8 and Figure 9). 11 For more information on commodity programs, see CRS Report RL34594, Farm Commodity Programsat $5.0 billion, up 5% from 2011 due to an increase in the portion of base acres receiving payments (raised to 85% from 83.3%) for the 2012 crop year. Production Expenses Total farm production expenses are forecast to rise by about 4% to a record $333.8 billion in 2012, ahead of 2011’s previous record tally of $287 billion (Table 3). The $12.5 billion increase in expenses contrasts with the anticipated $1.1 billion decline in gross cash receipts, thus contributing to a slightly lower farm income outlook in 2012. Fertilizer, fuel, feed, electricity, and seed costs, as well as most operating and overhead expenses, are all projected at record levels in 2012 (Figure 11 and Figure 12). The increase in expenses will affect crop and livestock farms differently. The principal expenses for livestock farms (i.e., feed and feeder animals and poultry) are expected to increase nearly $1.9 billion (2.3%) to $82.4 billion, while the principal crop expenses (seed, fertilizer, pesticides, and crop insurance expenses) are expected to increase $3.9 billion (4.3%) to $56.6 billion. The miscellaneous operating expenses category, which is projected up $3.4 billion or 10.4%, includes crop insurance costs and thus directly impacts crop production. (...continued) in the 2008 Farm Bill. 12 CRS Report RS21212, Agricultural Disaster Assistance. 13 CRS Report R40452, A Whole-Farm Crop Disaster Program: Supplemental Revenue Assistance Payments (SURE). Congressional Research Service 911 . U.S. Farm Income Figure 811. Farm Cash Production Expenses by Source, 2006 to 2011F 350 300 Overhead 250 Other operating costs $ Billion 200 Hired Labor 150 Interest 2012F 350 Overhead 300 Other operating costs 250 200 $ Billion Hired Labor Interest 150 Manufactured inputs 100 50 Farm origin inputs 50 0 2006 2007 2008 2009 2010P2010 2011F 2012f Source: USDA, Economic Research Service, “2011 Farm Income Forecast,” August 30, 2011February 12, 2012, at http://www.ers.usda.gov/Briefing/FarmIncome/. Notes: 20102011 is preliminary, 20112012 is forecast. See for Table 3 details. Figure 912. U.S. Farm Gross Revenue, Production Expenses, and Net Income 400 Gross Revenue $ Billion 300 200 Production Expenses 100 Net Cash Income 0 1960 1970 1980 1990 2000 2010 Source: USDA, Economic Research Service (ERS), “2011 Farm Income Forecast,” August 30, 2011, at http://www.ers.usda.gov/Briefing/FarmIncome/See above source. Notes: All values are in nominal terms, i.e., not adjusted for inflation. 20102011 is preliminary, 20112012 is forecast. Congressional Research Service 10 . U.S. Farm Income The increase in expenses will affect crop and livestock farms differently. The principal expenses for livestock farms (i.e., feed and feeder animals and poultry) are expected to increase nearly $11.5 billion (18%), while the principal crop expenses (seed, fertilizer, and pesticides) are expected to increase $7.3 billion (15%). In addition, since the value of crop production is expected to rise more than the value of livestock production, the rise in livestock-related expenses will impinge on net incomes of livestock farms more than crop farms. 12 . U.S. Farm Income Agricultural Trade Outlook A major catalyst behind projections for stronger farm income is the outlook for strong U.S. agricultural exports in 2011 (forecast up 26% to $137136.3 billion; Figure 1013). USDA projects that U.S. agricultural exports will hold steady at $137decline slightly to $132 billion in 2012. Much of the increase is due to since 2010 has been due to higher-priced grain and feed shipments plus record oilseed exports to China, and growing animal product exports to East Asia.14 product exports to East Asia.14 Figure 13. U.S. Agricultural Trade Since 1940 $140 Exports $120 $ Billions $100 $80 $60 Import s $40 $20 Trade Surplus $0 1940 1950 1960 1970 1980 1990 2000 2010 Source: USDA, ERS, Outlook for U.S. Agricultural Trade, AES-72, November 30, 2011. Over the past four decades, steady growth in high-valued export products (Figure 1114) has helped to push U.S. agricultural export value to ever higher totals; however, the current outlook is driven primarily by growth in bulk commodity shipments (primarily wheat, rice, feed grains, soybeans, cotton, and unmanufactured tobacco), which are forecast up 4442% in 2011. Horticultural exports are forecast up nearlyover $3 billion to $25.59 billion in 2011, and another $2.51 billion higher in 2012, on strong demand from Canada, the EU, and Asian markets. Livestock, poultry, and dairy exports are expected to grow strongly through 2011 (up nearly 3027% to $17.527.3 billion), while cotton exports are forecast up significantly at $98.8 billion in 2011, as larger domestic supplies and less export competition have pushed cotton prices to 140-year highs. The top five forecast markets for U.S. agricultural exports in 2011 are China ($19.5 billion), Canada ($18.5expected to be China ($19.9 billion), Canada ($18.6 billion), and Mexico ($17.7 billion), followed by Japan ($14 13.9 billion) and the EU-27 ($10.5 billion). These five countries are expected to maintain the same order in 2012 at very similar value levels. 2 billion). In 2012, Canada is expected to switch places with China as the U.S.’s top export market while the other three markets retain their same ranking. 14 USDA, ERS, Outlook for U.S. Agricultural Trade, AES-72, November 30, 2011. The U.S. agricultural trade outlook—released quarterly—is available at the ERS Agricultural Trade Briefing Room at http://www.ers.usda.gov/ Briefing/AgTrade/; the next update is scheduled for February 23, 2012. Congressional Research Service 13 . U.S. Farm Income Figure 14. U.S. Agricultural Trade: Bulk vs. High-Value Shares 100% 80% 60% High-Value 40% 20% Bulk 0% 1975 1980 1985 1990 1995 2000 2005 2010 Source: USDA, ERS, Outlook for U.S. Agricultural Trade, AES-72, November 30, 2011. U.S. agricultural imports are projected to be record large at $94.5 billion in 2011; however, the trade surplus also is projected record large at $42.59 billion, due to the surge in exports. U.S. agricultural imports are projected to grow rapidly in 2012 to $105.5 billion, thus cutting into the trade surplus which falls to $32 billion. 14 USDA, ERS, Outlook for U.S. Agricultural Trade, AES-71, August 31, 2011. For more information on the U.S. agricultural trade outlook see the ERS quarterly report available at the ERS Agricultural Trade Briefing Room at http://www.ers.usda.gov/Briefing/AgTrade/. Congressional Research Service 11 . U.S. Farm Income Figure 10. U.S. Agricultural Trade Since 1940 $140 $120 Exports $ Billions $100 $80 $60 Imports $40 $20 Trade Surplus $0 1940 1950 1960 1970 1980 1990 2000 2010 Source: USDA, ERS, Outlook for U.S. Agricultural Trade, AES-67, August 31, 2011. Figure 11. U.S. Agricultural Trade: Bulk vs. High-Value Shares 100% 80% 60% High-Value 40% 20% Bulk 0% 1975 1980 1985 1990 1995 2000 2005 201026.5 billion. However, as a share of total gross farm receipts, U.S. agricultural exports is projected to account for a record 33% of earnings (Figure 15). Figure 15. U.S. Agricultural Export Value as Share of Total Gross Farm Income 40% U.S. Agricultural Exports as Share of Total Gross Farm Income Share as % 30% 20% 10% 0% 1935 1945 1955 1965 1975 1985 1995 2005 Source: USDA, ERS, Outlook for U.S. Agricultural Trade, AES-67, August 3172, November 30, 2011. Congressional Research Service 1214 . U.S. Farm Income Long-Run Farm Income Projections to 20202021 Several institutions (both public and private)—including USDA, the Organization for Economic Cooperation and Development (OECD), the Food and Agricultural Policy Research Institute (FAPRI), and IHS Global Insight—routinely produce long-run 10- to 15-year agricultural projections for the U.S. farm sector. These annual projections cover agricultural commodities, agricultural trade, and aggregate indicators of the sector, such as farm income and food prices. The most recent projections available at the time of this report’s preparation are made by USDA and cover the period 2011-20202012-2021.15 Appending the long-term projections for the 2012-20202021 period to the current USDA agricultural outlook for 20112012 produces the chart seen in Figure 1216. Figure 1216. USDA Long-Run Farm Income Projections, 2012-2020 4002021 450 Gross Revenue 375 $ Billion 300 200 225 Production Expenses 100150 75 Net Cash Income 0 1960 1970 1980 1990 2000 2010 2020 Source: Data for 1960-20112012 are from USDA, ERS, Briefing Room: Farm Income and Costs; data for 2012 to 20202013 to 2021 are from USDA, ERS, Briefing Room: Agricultural Baseline Projections, February 14, 201113, 2012. Based on October 20102011 macroeconomic conditions, USDA projected net farmcash income levels to dip slightly to around $8885 billion in 20142015 before growing again to a projected $9897 billion by 2020.16 However, the underlying conditions (as of August 2011) have changed substantially since February. Both commodity and input prices are substantially higher than initially projected. As a result, current 2011 projections of gross revenue, production expenses, and net cash income are all significantly higher than initially projected. 2021.16 15 USDA Agricultural Projections to 20202021, OCE-20112012-1, USDA, ERS, Briefing Room: Agricultural Baseline Projections, February 14, 201113, 2012; at http://www.ers.usda.gov/Briefing/Baseline. 16 USDA updates its long-run forecasts every February. The projections are highly conditional on critical long-term assumptions made for U.S. and international macroeconomic conditions, U.S. and foreign agricultural and trade policies, and growth rates of agricultural productivity in the United States and abroad. Congressional Research Service 1315 . U.S. Farm Income Farm Asset Values and Debt Farm asset values—which reflect farm investors’ and lenders’ expectations about long-term profitability of farm sector investments—are projected up nearly 76% in 20112012 to $2,324474 billion, reflecting a continued strong outlook in the general farm economy (Table 6). Higher farm asset values are due primarily to stronger farm real estate values (Figure 13), which had fallen by 2.8% during 2009, 17). After rebounding in 2010 from a 2.8% decline during 2009—the first decline since 1987. After rebounding in 2010, —farm land cash markets suggest that land values will see renewed gains ofgrew by a projected 6.8% in 2011 relateddue to strong crop prices in 2010. . This same pattern is reflected in both cropland and pastureland values. Meanwhile, total farm debt is forecast to decline by 2% to $242 billion in 2011, down from a record $247 billion in 2010. As a result of the relative improvement between farm asset values and farm debt, farm equity (or net worth, defined as asset value minus debt) is projected higher in 2011 at $2,082 billion. Figure 13 Farm land cash markets in early 2012 suggest that land values will continue to see gains related to strong crop prices in 2012. Figure 17. U.S. Average Farm Land Values, 1985 to 2011F $3,500 Cropland $3,000 $ per Acre $2,500 $2,000 $1,500 Farm Real Estate $1,000 $500 Pasture $0 1985 1990 1995 2000 2005 2010 Source: USDA, NASS, Land Values 2011 Summary, August 2011. Notes: 2011 is a forecast. Farm real estate value measures the value of all land and buildings on farms. Cropland and pasture values are only available since 1998. Meanwhile, total farm debt is forecast to rise by nearly 4% to $254.1 billion in 2012. As a result of the relative improvement between farm asset values and farm debt, farm equity (or net worth, defined as asset value minus debt) is projected higher in 2012 at $2,220 billion. The farm debt-to-asset ratio had been steadily declining since 1998’s value of 16%, to a recent low of 10.4% in 2007, before rising to 12% in 2008 and 2009 (Figure 1418). However, it has resumed its pattern of decline, falling in 2010 and 2011, and is forecast to decline further in 2011 2012 to about 10.4% 10.3% (lowest figure on record). These data suggest a strong financial position in 2011 2012 for the agriculture sector as a whole. The U.S. farm debt-to-asset ratio peaked in 1985 at 23%. Congressional Research Service 1416 . U.S. Farm Income Figure 1418. U.S. Farm Debt-to-Asset Ratio Since 1960 25% 20% 15% 10% Farm Debt-to-Asset Ratio 5% 1960 1970 1980 1990 2000 2010 Source: USDA, Economic Research Service, “20112012 Farm Income Forecast,” August 30, 2011February 12, 2012, at http://www.ers.usda.gov/Briefing/FarmIncome/. Note: 20102011 is preliminary, 20112012 is forecast. Average Farm Household Income After two years of declines in 2008 and 2009, average farm household income returned to growth in 2010, up nearly 8%, and is projected to grow for a second consecutive year in 2011, rising 42% to $8386,352.17 The share of farm income derived from off-farm sources has increased steadily in recent decades and appears to have peaked at about 95% in 2000. In 2011, off-farm income sources are forecast to account for about 87% of the national average farm household income, compared with about 13% from farming activities (Figure 1519 and Table 5). Over the past decade, farm household incomes have surged ahead of average U.S. household incomes (Figure 1620 and Figure 1721). In 2009 (the last year for which comparable data were available), the average farm household income of $77,168169 was about 14% higher than the average U.S. household income of $67,976 (Table 5). 17 Household farm income data was last updated in Februaryon November 29, 2011. Congressional Research Service 1517 . U.S. Farm Income Figure 1519. U.S. Ave.Average Farm Household Income, On- and Off-Farm Sources, Since 1960 $90,000 $75,000 $60,000 $45,000 $30,000 Off-Farm $15,000 On-Farm $0 1960 1970 1980 1990 2000 2010 Source: USDA, Economic Research Service, Briefing Room: Farm Household Economics and Well-Being: Historic Data On Farm Operator Household Income, February 14, 201112, 2012, at http://www.ers.usda.gov/Briefing/ WellBeing/Gallery/historic.htm. Figure 1620. Comparison of Farm to U.S. Average Household Income Since 1960 $90,000 Average Farm Household Income $75,000 $60,000 $45,000 Average US Household Income $30,000 $15,000 $0 1960 1970 1980 1990 2000 2010 Source: USDA, Economic Research Service, “2011 Farm Income Forecast,” February 14November 29, 2011, at http://www.ers.usda.gov/Briefing/FarmIncome/. Note: 2010 is preliminary, 2011 is forecast. Congressional Research Service 1618 . U.S. Farm Income Figure 1721. Ratio of Farm to U.S. Average Household Income Since 1960 200% Ratio of Farm to U.S. Average Household Income 150% 100% 50% 0% 1960 1970 1980 1990 2000 2010 Source: See above source note. 2009 is the last year with comparable data. Table 1. Distribution of Farms and Value of Production by Farm Size, 2009 Family Farms Value of Gross Sales Total U.S. Production On-farm Share Off-farm Share Total Value 1.5% -13% 113% $66,832 30.0% 18.4% 4% 96% $96,177 209,949 9.9% 80.1% 70% 30% $164,609 2,131,007 100.0% 100.0% 9% 91% $77,168 Share Share 1,281,788 60.1% $10,000 to $249,999 639,270 > $250,000 < $10,000 All Total HH Income Number Source: USDA, ERS, 2009 USDA Agricultural Resource Management Survey. The share of income from farming increases with farm size as measured by gross sales (Table 1). “Large” commercial farm households (farms with annual sales greater than $250,000) obtained nearly 7073% of household income on-farm and accounted for 8082% of the value of total U.S. agricultural production in 20092010, while representing only about 10% of farm households.18 Intermediate family farms (farms with annual sales in excess of $10,000 but less than $250,000) obtained about 47% of household income from on-farm sources, accounted for about 1817% of the value of total U.S. agricultural production, and represented about 30% of family farms. “Small” farm households (annual sales less than $10,000) actually lost revenue from farming operations (13 (-8% of household income) and accounted for less than 2% of the value of total U.S. agricultural production in 20092010, while representing over 60% of farm households. A substantial number of these small farms are classified as rural residence farms and either receive little or no income from farm sources or have a total income level that qualifies them as limited-resource farms. 18 Table 1. Distribution of Farms and Value of Production by Farm Size, 2010 Family Farms Value of Gross Sales Total U.S. Production On-farm Share Off-farm Share Total Value 1.4% -8% 108% $70,558 29.9% 16.9% 7% 93% $78,716 214,070 10.0% 81.7% 73% 27% $185,098 2,143,063 100.0% 100.0% 14% 86% $84,440 Share Share 1,287,976 60.1% $10,000 to $249,999 641,017 > $250,000 < $10,000 All Total HH Income Number Source: USDA, ERS, 2010 USDA Agricultural Resource Management. 18 For more information on farm typology, see the ERS Briefing Room, Farm Household Economics and Well-Being: Farm Operator Household Income Forecasts, at http://www.ers.usda.gov/Briefing/WellBeing/farmhouseincome.htm. Congressional Research Service 1719 . U.S. Farm Income Table 2. U.S. Crop and Livestock Revenue ($ Billions) by Source, 2006-2011F 2006 2007-2012F 2007 2008 2009 2010 2011a 2012a Change (%) Field crops 62.6 86.9 111.1 105.0 105.5 138.4 28.5107.7 129.3 132.9 2.7% Food grains 9.1 13.6 18.7 14.8 13.9 17.3 24.6% Wheat 7.316.7 14.8 -12.7% Wheat 11.4 15.4 11.7 10.9 1413.9 3612.0 -15.8% Rice 1.8 2.1 3.2 3.0 3.0 2.4 -19.37 2.8 0.5% Feed crops 29.4 42.3 58.96 50.6 52.5 71.7 36.7% Corn 22.968.3 73.0 6.5% Corn 34.1 48.4 42.5 44.8 62.0 3858.8 63.6 7.6% Other Grains 1.3 2.2 2.7 2.4 2.2 2.5 15.5% Hay 5.12 2.4 10.2% Hay 6.0 7.4 5.6 5.4 7.2 33.34 7.0 -5.5% Oil Crops 18.5 24.6 28.6 35.5 35.1 41.3 17.6% Soybeans 17.336.3 37.1 2.3% Soybeans 23.1 26.4 33.7 33.2 39.0 17.5% Peanuts 0.633.9 34.5 1.6% Peanuts 0.8 1.2 0.8 0.8 1.0 7.21.3 23.8% Cotton (lint & seed) 5.5 6.5 5.2 4.0 6.3 8.1 28.6% Other Crops 59.6 61.8 62.5 61.9 63.9 68.1 6.50 7.9 -1.2% Other Crops 61.8 63.9 63.4 65.2 67.6 65.4 -3.3% Fruits and nuts 17.3 18.7 19.2 19.2 21.5 21.9 222.2 21.0 -6.0% Vegetables 18.0 19.3 19.9 20.3 19.9 21.6 8.620.9 19.8 -5.8% All other crops 23.9 24.824.2 23.9 23.4 22.5 22.5 24.5 9.17 24.4 24.6 1.0% Total Crops 122.1 150.1 175.0 168.3 172.9 206.5 19.4196.9 198.3 0.7% Meat animals 63.7 65.1 65.0 59.0 69.9 83.0 18.785.5 87.6 2.3% Cattle & calves 49.1 49.8 48.5 43.8 51.5 60.9 18.362.9 64.9 3.1% Hogs 14.1 14.8 16.1 14.7 17.9 21.4 19.822.0 22.0 0.3% Sheep & lambs 0.5 0.54 0.4 0.45 0.5 0.7 23.17 0.6 -3.9% Poultry and eggs 26.6 33.1 36.8 32.4 35.5 36.3 2.5% Broilers 17.92 36.3 0.3% Broilers 21.5 23.2 21.8 23.7 22.7 23.4 -13.1% Turkeys 3.5 3.9 4.5 3.6 4.4 5.0 15.3% Eggs 4.55.1 0.7% Eggs 6.7 8.2 6.1 6.5 6.8 57.6 7.0 -9.7% All dairy 23.4 35.5 34.8 24.3 31.4 39.7 26.65 37.1 6.5% Other livestock 4.8 4.9 5.0 4.5 4.7 4.8 1.64.8 0.2% Total Livestock 118.5 138.5 141.6 120.3 141.4 163.8 15.8166.0 165.8 -0.1% Government payments 15.8 11.9 12.2 12.2 12.4 10.6 -17.711.0 3.9% Other farm incomeb 16.8 17.6 21.5 22.0 18.3 1822.6 119.9 -13.7% Total Farm Revenue 273.2 318.0 350.4 322.8 345.0 399.1 15.7396.1 395.0 -0.3% Item Source: “Farm Income Briefing Room,” Economic Research Service, USDA, August 30, 2011February 13, 2012. a. Forecast.. Change represents year-to-year change between 20102011 and 20112012. b. Machine hire, custom work, forest products sales, insurance indemnities, and other farm income. Congressional Research Service 1820 . U.S. Farm Income Table 3. U.S. Farm Production Expenses ($ Billions) by Source, 2006-2011F 2006 2007-2012F 2007 2008 2009 2010 2011a 2012a Change (%) Farm origin inputsb 61.1 73.4 79.8 77.3 81.3 94.4 16.1% Feed 31.498.1 100.1 2.0% Feed 41.9 46.9 45.0 45.4 54.6 10.157.0 59.0 3.5% Livestock 18.6 18.8 17.57 16.7 19.6 22.0 12.1% 11.023.5 23.4 -0.2% 12.6 15.1 15.5 16.3 17.9 9.7% 37.56 17.8 0.7% 46.3 55.0 49.0 49.5 58.5 18.259.9 60.8 1.5% Fertilizer & lime 13.3 17.7 22.5 20.1 21.0 26.2 24.527.6 27.6 -0.1% Fuels & oils 11.3 13.8 16.2 12.7 13.2 16.4 24.1 Electricity 3.89 17.2 1.3% Electricity 4.3 4.5 4.6 4.6 4.7 1.8% Pesticides 9.06 4.8 5.4% Pesticides 10.5 11.7 11.5 10.6 11.2 5.4% 14.410.8 11.3 4.5% Total interest charges 15.1 15.4 15.2 14.5 15.7 8.614.2 14.9 4.9% Short-term interest 6.4 6.9 6.7 6.4 6.0 6.7 12.62 6.2 1.0% Real-estate interest 8.0 8.3 8.8 8.7 8.5 9.0 5.88.1 8.7 7.9% Other operating exp.d 76.9 89.8 94.0 89.5 86.2 92.2 7.07 99.7 7.6% Repair & maintenance 12.5 14.3 14.8 14.7 14.8 16.6 12.717.2 18.2 5.3% Hired & contract labor 24.2 29.0 29.730.0 28.9 27.6 27.8 0.62 28.6 5.3% Custom work 3.5 3.8 4.1 3.9 4.3 4.7 9.98 4.9 1.1% Marketing, storage, etc. 9.1 10.3 10.1 10.3 10.3 11.0 7.1% Miscellaneous 27.610.9 12.2 11.3% Miscellaneous 32.3 34.9 31.7 29.2 32.0 9.75 35.9 10.4% Overhead expensese 42.9 44.9 49.0 50.3 54.2 5756.3 5.858.2 3.3% Capital consumption 26.2 27.0 28.7 30.1 30.7 31.6 32.5 2.82.9% Property taxes 9.0 10.3 10.7 10.4 10.8 11.81 12.1 8.7% Non-operator net rent 7.6 7.6 9.6 9.8 12.6 13.9 10.0% 232.76 13.6 -0.1% 269.5 293.2 281.1 285.6 318.1 11.4321.3 333.8 3.9% Item Seed Manufactured inputsc Total interest charges Total Production Exp. Source: “Farm Income Briefing Room,” Economic Research Service, USDA, August 30, 2011February 13, 2012. a. Forecast.. Change represents year-to-year change between 20102011 and 20112012. b. Farm origin inputs include purchases of feed, livestock and poultry, and seed. c. Manufactured inputs include fertilizers and lime, pesticides, petroleum fuel and oils, and electricity. d. Other operating costs include repair and maintenance of capital items, machine hire and custom work, marketing storage, transportation expenses, and other miscellaneous expenses. e. Overhead expenses include property taxes, net rent to a non-operator landlord, and capital consumption. Congressional Research Service 1921 . Table 4. Annual U.S. Farm Income Since 20042005 ($ billions) Item 2004 2005 2006 2007 2008 2009 2010 2011a 2012a Change (%) 1. Cash receipts 237.9 241.0 240.6 288.5 316.7 288.6 314.4 314.4 17.8362.9 364.1 0.3% Cropsb Livestock 2. Government paymentsc 114.4 123.5 116.1 124.9 122.1 118.5 150.1 138.5 175.0 141.6 13.0 24.4 15.8 11.9 12.2 168.3 120.3 12.2 172.9 141.4 12.4 206.5 163.8 10.2 19.4% 15.8% -17.7196.9 166.0 10.6 198.3 165.8 11.0 0.7% -0.1% 4.0% Fixed direct CCPe Marketing Loan Benefitsf Conservation Ad hoc and emergency All otherg 3. Farm-related incomeh 5.2 1.1 3.5 2.3 0.6 0.2 15.7 5.2 4.1 7.1 2.8 3.2 2.1 14.4 5.1 4.0 1.8 3.0 0.3 1.7 16.8 5.1 1.1 1.1 3.1 0.5 1.0 17.6 5.1 0.7 0.3 3.2 2.1 0.8 21.5 4.7 1.2 1.1 2.8 0.6 1.7 22.0 4.8 0.2 0.1 3.5 3.1 0.7 18.3 4.7 0.0 0.0 3.46 1.46 0.7 18.6 -2.1% -88.1% -92.9% -2.1% -54.1% -9.3% 1.722.6 5.0 0.0 0.0 3.7 1.5 0.8 19.9 5.3% 0% 0% 3.5% -5.3% 22.5% -12.0% 4. Gross cash income (1+2+3) 5. Cash expensesi 6. NET CASH INCOME 266.5 182.9 83.7 279.8 192.8 87.0 273.2 204.8 68.4 318.0 240.6 77.4 350.4 261.8 88.6 322.8 248.4 74.4 345.0 252.7 92.3 399.1 284.3 114.8 15.7% 12.5% 24.4396.1 287.4 108.7 395.0 298.7 96.3 -0.3% 4.0% -11.5% 7. Total gross revenuesj 8. Total production expensesk 9. NET FARM INCOME 294.9 207.5 87.4 298.6 219.8 78.8 290.2 232.7 57.4 339.6 269.5 70.0 377.9 293.2 84.7 342.7 281.1 61.6 364.7 285.6 79.1 421.7 318.1 103.6 15.6% 11.4% 31.0419.4 321.3 98.1 425.5 333.8 91.7 1.5% 3.9% -6.5% paymentsd Source: USDA, Economic Research Service, briefing rooms: Farm Income and Costs: Farm Sector Income, and Costs: Farm Sector Income, available at http://www.ers.usda.gov/ Briefing/FarmIncome/; U.S. farm income data updated as of August 30, 2011February 13, 2012. a. Data for 2010 are preliminary, 2011 are USDA forecasts. Change represents year-to-year change between 20102011 and 20112012. b. Includes Commodity Credit Corporation loans under the farm commodity support program. c. Government payments reflect payments made directly to all recipients in the farm sector, including landlords. The non-operator landlords’ share is offset by its inclusion in rental expenses paid to these landlords and thus is not reflected in net farm income or net cash income. For more information on U.S. farm commodity programs, see CRS Report RL34594, Farm Commodity Programs in the 2008 Farm Bill, by Jim Monke; for more information on conservation programs see CRS Report RL34557, Conservation Provisions of the 2008 Farm Bill, by Tadlock Cowan, Renée Johnson, and Megan Stubbs. d. Direct payments include production flexibility payments of the 1996 Farm Act through 2001, and fixed direct payments under the 2002 Farm Act since 2002. e. CCP = counter-cyclical payments. f. Includes loan deficiency payments (LDP); marketing loan gains (MLG); and commodity certificate exchange gains. g. Peanut quota buyout, milk income loss payments, and other miscellaneous program payments. h. Income from custom work, machine hire, agri-tourism, forest product sales, and other farm sources. i. Excludes depreciation and perquisites to hired labor. j. Gross cash income plus inventory adjustments, the value of home consumption, and the imputed rental value of operator dwellings. k. Cash expenses plus depreciation and perquisites to hired labor. CRS-2022 . Table 5. Average Annual Income per U.S. Household, Farm versus All, 2004-2011F ($ per household) 2004 2005 2006 2007 2008 On-Farm Income $13,325 $14,227 $8,541 $11,364 $9,764 Off-Farm income $67,279 $67,091 $72,502 $77,432 Total Farm income $80,604 $81,318 $81,043 $88,796 2009 2010 2011F $6,866 $10,41411,796 $11,174 $70,032 $70,302 $72,606671 $75,178 $79,796 $77,169 $83,02084,440 $86,352 Average U.S. Farm Income by Source Average U.S. Household Income Farm Household Income as Share of U.S. Avg. Household Income (%) $60,466 $63,344 $66,570 $67,609 $68,424 $67,976 na na 133% 128% 122% 131% 117% 114% na na Source: USDA, ERS Briefing Room: Farm Household Economics and Well-Being: Historic Data On Farm Operator Household Income, at http://www.ers.usda.gov/Briefing/ WellBeing/Gallery/historic.htm; as of February 14, 201113, 2012. Note: Data for 2011 are USDA forecasts. Table 6. Average Annual Farm Sector Debt-to-Asset Ratio, 2004-2011F2005-2012F ($ billions) 2004 2005 2006 2007 2008 2009 2010 2011F 2012F Farm Assets 1,588.0 1,779.4 1,923.6 2,055.3 2,023.3 2,054.4 2,179.7 2,324.2190.9 2,339.8 2,474.3 Farm Debt 181.9 196.4 203.6 214.1 241.6 241.9 246.9 242244.8 254.1 Farm Equity 1,406.1 1,583.0 1,720.0 1,841.2 1,781.7 1,812.5 1,932.8 2,082.1944.0 2,095.0 2,220.2 Debt-to-Asset Ratio (%) 11.5% 11.0% 10.6% 10.4% 11.9% 11.8% 11.3% 10.45% 10.3% Source: USDA, ERS Briefing Room: Farm Household Economics and Well-Being: Farm Business Balance Sheet,, at http://www.ers.usda.gov/data/FarmBalanceSheet/ fbsdmu.htm; as of August 30, 2011February 13, 2012. Note: Data for 20102011 are preliminary, 20112012 are USDA forecasts. CRS-2123 . Table 7. U.S. Prices and Support Rates for Selected Farm Commodities Since 20052006 Commoditya Unit Year 2006/07 2007/08 2008/09 2009/10F10 2010/11Fb11 2011/12Fb Wheat $/bu Jun-May 4.26 6.48 6.78 4.87 5.70 7.00-8.20 33.315-7.45 28.1% — — 2.75 3.92 Corn $/bu Sep-Aug 3.04 4.20 4.06 3.55 5.20-5.30 6.20-7.20 27.618 5.80-6.60 19.7% — 1.95 2.63 Sorghum $/bu Sep-Aug 3.29 4.08 3.20 3.22 5.15-5.25 6.00-7.00 25.002 5.70-6.50 21.5% — 1.95 2.57 Barley $/bu Jun-May 2.85 4.02 5.37 4.66 3.86 5.80-6.90 64.520-5.60 39.9% — 1.85 2.44 Oats $/bu Jun-May 1.87 2.63 3.15 2.02 2.52 3.40-4.00 46.825-3.55 34.9% 1.33 1.44 Rice $/cwt Aug-Jul 9.96 12.80 16.80 14.40 12.5070 13.20-14.20 9.690-14.50 11.8% 6.50 10.50 Soybeans $/bu Sep-Aug 6.43 10.10 9.97 9.59 11.35 12.50-14.50 19.230 11.10-12.30 3.5% 5.00 5.80 Soybean oil ¢/lb Oct-Sep 31.0 52.0 32.16 35.95 53.25 54.5-58.5 11.620 50.5-54.5 -1.3% — — Soybean meal $/st Oct-Sep 205.4 335.9 331.2 311.27 345 355-385 7.2.52 290-320 -11.7% — — — — — — — Cotton, Upland ¢/lb Aug-Jul 46.5 59.3 47.8 62.9 81.5 85-105 16.650 87-93 10.4% — — — — — — — — — — 52.00 71.25 Choice Steers $/cwt Jan-Dec 85.4 91.8 92.27 83.25 95.38 111-113 17.4% 111-120 3.1114.73 20.3% 121-129 9.0% — — Barrows/Gilts $/cwt Jan-Dec 47.3 47.1 47.84 41.24 55.06 64-66 18.1% 62-68 0.066.11 20.1% 63-67 -1.7% — — Broilers ¢/lb Jan-Dec 64.4 76.4 79.7 77.60 82.90 82.9 -2.3% 81-88 4.379.0 -4.7% 82-87 7.0% — — Eggs ¢/doz Jan-Dec 71.8 114.4 128.3 103.0 106.30 107-110 2.1% 100-108 -4115.3 8.5% 103-109 -8.1% — — Milk $/cwt Jan-Dec 12.90 19.13 18.29 12.83 16.29 20.30-20.50 25.2% 17.80-18.80 -10.326 20.14 23.9% 18.00-18.70 -8.9% — — 2012/13Fb13Pb % change 2011 from 2011/12d Loan ratee 2011 Target Price % change from 2010/11c Source: Various USDA agency sources as described in the notes below. a. Season average farm price for grains and oilseeds are from USDA, National Agricultural Statistical Service, Agricultural Prices. Calendar year data is for the first year, e.g., 2000/2001 = 2000; F = forecast and P = projection from World Agricultural Supply and Demand Estimates (WASDE) August 12, 2011February 9, 2012;—= no value; and USDA’s out-year 2012/2013 crop price forecasts will first appear in the May 2012 WASDE report. WASDE reports are available at http://www.usda.gov/oce/commodity/ wasde/. Soybean and livestock product prices are from USDA, Agricultural Marketing Service (AMS): soybean oil—Decatur, IL, cash price, simple average crude; soybean meal—Decatur, IL, cash price, simple average 48% protein; choice steers—Nebraska, direct 1100-1300 lbs.; barrows/gilts—national base, live equivalent 51%-52% lean; broilers— wholesale, 12-city average; eggs—Grade A, New York, volume buyers; and milk—simple average of prices received by farmers for all milk. b. Data for 2010/2011, and 2011/2012 are USDA forecasts; 2012/2013 data are USDA projections. c. Percent change from 2010/2011, calculated using the difference from the midpoint of the range for 2011/2012 with the estimate for 2010/2011. d. Percent change from 2011/2012, calculated using the difference from the midpoint of the range for 2012/2013 with the estimate for 2011/2012. e. Loan rate and target prices are for the 2011/2012 crop year. For more information, see CRS Report RL34594, Farm Commodity Programs in the 2008 Farm Bill. CRS-2224 . U.S. Farm Income Author Contact Information Randy Schnepf Specialist in Agricultural Policy rschnepf@crs.loc.gov, 7-4277 Congressional Research Service 2325