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According to USDA’s Economic Research Service (ERS), national net farm income—a key
indicator of U.S. farm well-being—is forecast at $71.2 billion in 2009, down 20% from the
previous year’s record of $89.3 billion. Lower commodity prices are expected to generate
declines in output receipts as well as input costs. Production costs are forecast to decline $13.5
billion (down nearly 5%) to $277.1 billion. However, the lower costs are more than offset by
forecast declines in cash receipts for both crops (down 10% to $162.4 billion) and livestock sales
(down 8% to $132.2 billion).
Despite the forecast fall-off, U.S. farm income remains high by historical standards, as the most
recent seven-year period represents the most profitable period for the agricultural sector in U.S.
history.
Government farm payments are projected down about 8% in 2009 at $11.4 billion. Most of the $1
billion decline from 2008 government payments results from sharply lower payouts (down $2.4
billion) under ad hoc disaster and emergency programs. However, forecast lower commodity
prices are expected to trigger higher payments under marketing loan and counter-cyclical
payment programs in 2009, thereby partially offsetting lower disaster payments.
Within the farm balance sheet, total farm asset value of $2,388 billion and total farm debt of $217
billion are both projected at record levels in 2009. The debt-to-asset ratio of 9.1% continues the
downward trend ongoing since 1998 and represents the lowest level since 1960, suggesting a
strong financial position for the agricultural sector as a whole.
However, less than ideal market conditions heading into 2009 suggest that considerable
uncertainty continues to surround the longer-term farm income outlook. On the one hand, the
global financial crisis, economic recession, rising unemployment, limited credit availability, and
plummeting asset values that persist in early 2009 have contributed to substantial “demand
destruction” (i.e., a severe weakening of consumer demand), which bodes poorly for farm
commodity price prospects. On the other hand, weak energy markets and declining input prices
could provide some spark to both producer investment and consumer demand for agricultural
sector products, perhaps by the middle to latter half of the year.
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Introduction ..................................................................................................................................... 1
Calendar Year 2009: Farm Income Forecast Down......................................................................... 2
Cash Receipts ............................................................................................................................ 4
Crops................................................................................................................................... 5
Livestock............................................................................................................................. 6
Government Payments .............................................................................................................. 7
Production Expenses ................................................................................................................. 8
Long-Run Farm Income Projections to 2018 ................................................................................ 10
Average Farm Household Income ..................................................................................................11
Farm Asset Values and Debt.......................................................................................................... 14
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Figure 1. Annual U.S. Farm Sector Income, 1960 to 2009F ........................................................... 2
Figure 2. Monthly Farm-Prices-Received for Major Field Crops ................................................... 3
Figure 3. Monthly Farm-Prices-Received for Major Livestock Products ....................................... 3
Figure 4. Farm Cash Receipts by Source, 1990 to 2009F ............................................................... 4
Figure 5. Crop Cash Receipts by Source, 2005 to 2009F................................................................ 5
Figure 6. U.S. Livestock Product Cash Receipts by Source, 2005 to 2009F .................................. 7
Figure 7. U.S. Government Farm Support, Direct Outlays, 1996 to 2009F.................................... 8
Figure 8. Farm Cash Production Expenses by Source 2004 to 2009F ............................................ 9
Figure 9. U.S. Farm Gross Revenue, Production Expenses, and Net Income, Since 1960 ........... 10
Figure 10. USDA Long-Run Farm Income Projections, 2010-2019 ..............................................11
Figure 11. U.S. Average Farm Household Income, by On- and Off-Farm Sources,
Since 1960 .................................................................................................................................. 12
Figure 12. Comparison of Farm to U.S. Average Household Income Since 1960 ........................ 13
Figure 13. Ratio of Farm to U.S. Average Household Income Since 1960 ................................... 13
Figure 14. U.S. Farm Debt-to-Asset Ratio Since 1960 ................................................................. 14
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Table 1. Annual U.S. Farm Income Since 2002 ............................................................................ 15
Table 2. Average Annual Income per U.S. Household, Farm versus All, 2002-2008.................... 17
Table 3. Average Annual Farm Sector Debt-to-Asset Ratio, 2002-2008F..................................... 17
Table 4. U.S. Prices and Support Rates for Selected Farm Commodities Since 2002 .................. 18
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Author Contact Information .......................................................................................................... 19
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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, which has increased in
importance in recent decades, is not included in the calculation of aggregate farm income.
Instead, it is included in the discussion of farm income at the household level.
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 and presentation of statistics on the issues discussed in this report, see Agricultural
Income and Finance Outlook, AIS-86, ERS, USDA, December 2008.
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USDA forecasts another good year for the farm economy in 2009, but earnings will likely be
down from the preceding two years (2007 and 2008) as commodity prices have weakened
substantially for most major field crops and livestock products heading into 2009 (Figure 2 and
Figure 3). USDA forecasts net farm income at the $71.2 billion, down 20% from the previous
year’s record $89.3 billion (Table 1).3 When measured in cash terms, net cash income in 2009 is
projected down about 17% to $77.3 billion, compared with the previous year’s record of $94.4
billion (Figure 1). Net cash income is projected to fall less than net farm income because of the
carryover of unsold crops from 2008 for sale in 2009.
Figure 1. Annual U.S. Farm Sector Income, 1960 to 2009F
100
80
Net Cash Income
60
ion
ill
B
$ 40
Net Farm Income
20
0
1960
1970
1980
1990
2000
2010
Source: USDA, Economic Research Service, “2009 Farm Income Forecast,” February 12, 2009, at
http://www.ers.usda.gov/Briefing/FarmIncome/.
Notes: All values are in nominal terms, i.e., not adjusted for inflation. 2008 is preliminary, 2009 is forecast.
The record farm income levels achieved in 2008 were driven largely by record high prices for
most agricultural commodities. From a historical perspective, the six years extending from 2003
through 2008 represent the six highest years for U.S. farm income on record. USDA’s 2009
forecast would extend that period to a seventh year. National net cash income averaged nearly
$81 billion per year since 2003, well above the previous single-year high of $60.8 billion
achieved first in 1993 and again in 1997.
3 ERS’s 2009 farm sector income forecast, last updated on February 12, 2009, is available at the Farm Income and
Costs Briefing Room, at http://www.ers.usda.gov/Briefing/FarmIncome/nationalestimates.htm.
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Figure 2. Monthly Farm-Prices-Received for Major Field Crops
18
70
Cotton
)
60
ns
15
a
e
b
y
o
50
t, s
e) 12
a
e
ric
h
t (
on)
40
w
Rice
n,
r cw
9
or
e
c
p
30
l (
und (cott
e
r $
h
o
Soybeans
s
6
r po
20 pe
r bu
$
pe
Wheat
$
3
10
Corn
0
0
2002
2004
2006
2008
Source: USDA, National Agricultural Statistics Service.
Figure 3. Monthly Farm-Prices-Received for Major Livestock Products
100
24
Cattle, 500+ lbs
)
rs 80
18
ile
ro
All Milk
, b
s
)
g
o
ilk
m
, h
le
t (
60
12 w
All Hogs
r c
t (catt
e
p
cw
$
$ per 40
6
Broilers
20
0
2002
2004
2006
2008
Source: USDA, National Agricultural Statistics Service.
Note: cwt = hundredweight or units of 100 lbs.
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Most crop and livestock prices are expected to be substantially lower in the 2008/2009 marketing
year (crops) and the 2009 calendar year (livestock) (Table 4). As a result, crop receipts are
forecast down 10% while livestock receipts are forecast nearly 8% lower. The combined value of
cash receipts from sales of both crop and livestock commodities is projected at $294.6 billion in
2009, down almost $30 billion from the previous year’s record amount (Table 1 and Figure 4).
Broiler prices are the major exception to the declining price pattern as USDA forecasts a third
consecutive year of higher broiler prices. However, a precipitous forecast drop (down 38%) in
producer milk prices is expected to lead the decline in livestock receipts.
Figure 4. Farm Cash Receipts by Source, 1990 to 2009F
360
Government Payments
300
Farm-Related Income
240
n
io 180
$ Bill
Livestock Product Receipts
120
60
Crop Receipts
0
1990
1995
2000
2005
Source: USDA, Economic Research Service, “2009 Farm Income Forecast,” February 12, 2009, at
http://www.ers.usda.gov/Briefing/FarmIncome/.
Notes: 2008 is preliminary, 2009 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, agri-tourism, forest product sales, insurance indemnities, and cooperative patronage dividend fees.
In recent years, U.S. domestic demand has been supported by the rapid emergence of the U.S.
agriculture-based ethanol industry. In addition, strong export demand through 2007 and the first
half of 2008, aided in part by a weak dollar, helped to draw stocks for major grains and oilseeds
to historically low levels in 2008, thus supporting higher market prices. However, the economic
conditions that persist in early 2009—a global financial crisis, economic recession, rising
unemployment, limited credit availability, and plummeting asset values—have contributed to a
severe weakening of consumer demand. As a result, domestic and international demand for
biofuels, as well as meat and dairy products (and subsequent feed grain) has eroded dramatically.
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Slumping commodity prices, although highly volatile since mid-2008, are expected to result in
lower crop cash receipts in 2009 at $162 billion, down 10% (Figure 5). Sales of field crops (i.e.,
feed, food, and oil crops) are expected to decline over 14% from 2008 to $98.7 billion. This total
includes feed crop (i.e., corn, sorghum, barley, and oats) sales of $52.4 billion, down 15%, food
crop (i.e., wheat and rice) sales of $15.3 billion, down 22%, and oil crop (i.e., soybeans,
sunflowers, rapeseed/canola, and other minor oilseeds) sales of $27.2 billion, down 7%. Corn
cash receipts alone are projected down by $8 billion in 2009, while wheat receipts decline by over
$4 billion. Cotton sales are forecast at $3.8 billion, a decline of nearly 24% due to lower plantings
and output in 2008, and sharply falling prices since mid-2008.
Figure 5. Crop Cash Receipts by Source, 2005 to 2009F
200
Cotton
Other
150
Fruits &
Vegetables
n
io
ill 100
Food crops
B
$
Oil
crops
50
Feed
crops
0
2005
2006
2007
2008P
2009F
Source: USDA, Economic Research Service, “2009 Farm Income Forecast,” February 12, 2009, at
http://www.ers.usda.gov/Briefing/FarmIncome/.
Notes: 2008 is preliminary, 2009 is forecast.
During the 2005 to 2008 period, crop output and sales were influenced by the rapid expansion of
corn-based biofuel production, due in large part to strong federal incentives. With this strong
support, the U.S. corn-based ethanol industry has grown rapidly since mid-2004, when production
capacity was estimated at around 3 billion gallons per year, to over 10.8 billion gallons as of
December 30, 2008.4 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 4.7 billion gallons in 2007 to
4 Production capacity estimates, Renewable Fuels Association, at http://www.ethanolrfa.org/industry/locations/.
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9 billion in 2008 and 15 billion by 2015.5 As a result of surging ethanol production, an ever-
increasing share of the U.S. corn crop (estimated to reach nearly 30% in 2008/2009) has been
used to produce ethanol.6 This additional demand helped to push corn and other crop prices
steadily higher during the 2005-to-2008 period as they competed for a fixed amount of cropland
(Table 4).
However, the ongoing global financial crisis and weakened economies have curtailed demand for
energy, feed grain, meat, and dairy products (among other consumer goods), thereby pushing
energy and commodity prices lower. The U.S. ethanol industry has been under substantial
pressure and some restructuring is underway. In the meantime new plant construction has slowed
dramatically and utilization of existing plant capacity has declined. As a result, USDA has
gradually lowered its projection of corn-for-ethanol use in the 2008/2009 corn marketing year
from 4 billion bushels to 3.6 billion bushels.7 This pull-back in corn demand from the biofuels
sector, combined with a weak export market and declining feed demand from the livestock sector
(see below), has contributed to softer commodity prices for feed grains and other field crops.
Fruit and tree nuts are expected to experience price declines in 2009, thereby contributing to
lower cash receipts, while vegetable and melon receipts are expected to decline due to lower
acreage and production in 2009. Cash receipts for the “Other” crops category are expected to
increase for all its major components, including greenhouse and nursery, tobacco, and both
sugarcane and sugarbeets.
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The livestock sector is projected to account for about 44% of total farm cash receipts in 2009,
unchanged from 2008. As with crop sales, the value of livestock product sales also is forecast
lower in 2009 at $132.2 billion, down 8% from the previous year’s record of $143.1 billion
(Figure 6).
Declining market prices for most major livestock categories—particularly for beef, poultry, and
hogs—in 2009 are expected to be the driving factor behind lower cash receipts for livestock
products. Most notable are sharply lower price forecasts for milk heading into 2009. Milk prices
are projected about 38% lower in 2009, eggs are forecast down about 4.5%, choice steers down
3.5%, and hogs prices down slightly by 0.7% (Table 4). Broilers are the exception as they are
forecast to experience a third consecutive year of increase into the 81-to-87-cents-per-pound
range in 2009.
Despite their price declines, beef and hog receipts are forecast up slightly (1.4% and 2.5%,
respectively) on high slaughter numbers that partially offset the lower prices, while broiler
receipts are forecast up 4% over 2008. However considerable uncertainty surrounds the export
markets for beef, pork, and poultry meat in 2009. Egg receipts are forecast 3.8% lower in 2009
due to lower supplies during the first half of 2009 and weaker prices through the year.
Dairy cash receipts are forecast 35% lower in 2009, due primarily to sharply weaker milk prices
(forecast down 38%). Dairy supplies are expected to remain similar to 2008.
5 For more information see CRS Report R40110, Biofuels Incentives: A Summary of Federal Programs, by Brent
Yacobucci.
6 USDA, World Agricultural Outlook Board, World Agricultural Supply and Demand Estimates, Feb. 10, 2009.
7 Ibid.
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Figure 6. U.S. Livestock Product Cash Receipts by Source, 2005 to 2009F
150
Other
Dairy
100
n
Poultry
o
&
Eggs
Billi
$
Hogs
50
Cattle
&
calves
0
2005
2006
2007
2008P
2009F
Source: USDA, Economic Research Service, “2009 Farm Income Forecast,” February 12, 2009, at
http://www.ers.usda.gov/Briefing/FarmIncome/.
Notes: 2008 is preliminary, 2009 is forecast.
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Direct government payments are forecast at $11.4 billion in 2009, down about 8% from $12.4
billion in 2008 and well below the record of $24.4 billion in 2005. The biggest drop-off in
government payments is a decline of $2.4 billion forecast to occur for ad hoc and emergency
disaster assistance—which (along with other emergency assistance) has figured heavily in farm
sector income in most of the previous 20 years (1989-2008).8 Ad hoc and emergency disaster
assistance is projected at $0.26 billion in 2009. 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 will not begin receiving payments until calendar year 2010.
Lower market prices forecast for 2009 are expected to generate moderate increases in payments
under the two major price-contingent programs—counter-cyclical payments (CCP), which are
projected to increase to about $1.2 billion, and marketing loan benefits (loan deficiency
payments, marketing loan gains, and certificate exchange gains), which are projected to rise
slightly to about $0.7 billion in 2009.9 Payments under the Milk Income Loss Contract Program
8 For more information, see CRS Report RL31095, Emergency Funding for Agriculture: A Brief History of
Supplemental Appropriations, FY1989-FY2009, by Ralph M. Chite; and CRS Report RS21212, Agricultural Disaster
Assistance, by Ralph M. Chite.
9 For more information on commodity programs, see CRS Report RL34594, Farm Commodity Programs
in the 2008 Farm Bill, by Jim Monke.
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(MILC)—which compensates dairy producers when domestic milk prices fall below a specified
level—are also expected to rise to about $0.7 billion due to the falling milk prices.
Figure 7. U.S. Government Farm Support, Direct Outlays, 1996 to 2009F
25
All Other
Ad Hoc and Emergency
Conservation
20
Price Contingent
Direct Payments
15
n
io
ill
B
$
10
5
0
1996
1998
2000
2002
2004
2006
2008P
Source: USDA, Economic Research Service, “2009 Farm Income Forecast,” February 12, 2009, at
http://www.ers.usda.gov/Briefing/FarmIncome/; and USDA, Risk Management Agency, Current Year-to-Date
National Summary of Business Reports, at http://www.rma.usda.gov/data/sob.html.
Notes: Data are on a fiscal year basis and may not correspond exactly with the crop or calendar year; 2008 is
preliminary, 2009 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 (LDPs), marketing loan gains, and counter-cyclical payments (CCPs); conservation outlays
include Conservation Reserve Program (CRP) 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.
In contrast, farm fixed direct payments, whose payment rates are fixed in legislation and are not
affected by the level of program crop prices, are expected to decline slightly due to producers
giving up a portion of their direct payments upon enrolling in the Average Crop Revenue Program
(ACRE) in 2009.
Conservation payments have grown slowly but steadily since 1998; however, they are expected to
remain steady at about $3.2 billion in 2009.
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Falling prices for major farm inputs (including fertilizers, feed, and fuels) are expected to lower
total production expenses by nearly 5% to $277.1 billion in 2009, down $13.5 billion from 2008’s
record level (Figure 8 and Figure 9).
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Figure 8. Farm Cash Production Expenses by Source 2004 to 2009F
300
250
Overhead
Other
operating
200
costs
Hired Labor
150
Interest
llion
Bi
Manu-
$ 100
factured
inputs
50
Farm
origin
inputs
0
2004
2005
2006
2007
2008P
2009F
Source: USDA, Economic Research Service, “2009 Farm Income Forecast,” February 12, 2009, at
http://www.ers.usda.gov/Briefing/FarmIncome/.
Notes: 2008 is preliminary, 2009 is forecast. Farm origin inputs include purchases of feed, livestock and poultry,
and seed. Manufactured inputs include fertilizers and lime, pesticides, petroleum fuel and oils, and electricity.
Other operating costs include repair and maintenance of capital items, machine hire and custom work, marketing
storage, transportation expenses, and other miscellaneous expenses. Overhead expenses include property taxes,
net rent to a non-operator landlord, and capital consumption.
Manufactured inputs—fertilizer, fuels, electricity, and pesticides—which account for about 18%
of farm expenses, are expected to decline nearly 16% in expenditures in 2009. Another major
farm expense for livestock producers is feed costs. Lower forecast prices for most feed grains are
expected to sharply lower feed costs (classified as farm-origin inputs) to $40.8 billion, down
nearly 10% year-to-year for livestock producers. Costs for other farm-origin inputs, livestock and
seed, are forecast up slightly.
Costs for hired labor and other operating expenses are forecast slightly lower in 2009, due in
large part to a weakening labor market and lower energy costs.
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Figure 9. U.S. Farm Gross Revenue, Production Expenses, and Net Income,
Since 1960
(cash basis)
360
Gross Revenue
300
240
n
io
ill 180
B
$
120
Production Expenses
60
Net Cash Income
0
1960
1970
1980
1990
2000
Source: USDA, Economic Research Service, “2009 Farm Income Forecast,” February 12, 2009, at
http://www.ers.usda.gov/Briefing/FarmIncome/.
Notes: All values are in nominal terms, i.e., not adjusted for inflation. 2008 is preliminary, 2009 is forecast.
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Every February, USDA releases its 10-year long-run 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 cover
the period 2009-2018.10 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. The
macroeconomic assumptions were completed in October 2008. The report uses as a starting point
the short-term projections from the November 2008 World Agricultural Supply and Demand
Estimates report.
Accordingly, looking out over the 2009-2018 period, USDA projects that net farm income
declines in the near term from the high levels of 2007 and 2008, but remains historically strong
and rebounds to near-record levels by the end of the projections (Figure 10). Key points that
emerge from the USDA farm income projections include:
10 USDA Agricultural Projections to 2018, OCE-2009-1, USDA, Economic Research Service, February 2009; available
at http://www.ers.usda.gov/Briefing/Baseline/.
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Figure 10. USDA Long-Run Farm Income Projections, 2010-2019
400
Gross Revenue
320
n 240
illio
B
$ 160
Production Expenses
80
Net Cash Income
0
1960
1970
1980
1990
2000
2010
Source: USDA Agricultural Projections to 2018, OCE-2009-1, USDA, ERS, February 2009.
Notes: Data for years 2009 through 2018 are conditional USDA projections.
• The ongoing world economic slowdown underpins a retreat in global
consumption, trade, and prices in the near term, reducing the U.S. agricultural
trade value and farm income from 2008 levels.
• However, once global economies recover, steady domestic and international
economic growth supports gains in the U.S. agricultural sector.
• Sustained biofuel demand and strengthening global food demand provide a major
impetus for projections of rising cash receipts after 2009.
• Thus, after declining in the near term, farm income and U.S. agricultural trade
grow through the rest of the projection period.
• Lower government payments (which result in large part from strengthening
commodity prices) and rising farm production expenses offset some of the gains
in cash receipts and other sources of farm income.
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Average farm household income is forecast at $85,140 in 2009, down slightly from the record of
$86,798 in 2008. The share of farm income derived from off-farm sources has been increasing
steadily in recent decades. In 2009, off-farm income sources are forecast to account for over 95%
of the national average farm household income, compared with less than 5% from farming
activities (Figure 11).
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Figure 11. U.S. Average Farm Household Income, by 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
Source: USDA, Economic Research Service, “2009 Farm Income Forecast,” February 12, 2009, at
[http://www.ers.usda.gov/Briefing/FarmIncome/].
Notes: 2008 is preliminary, 2009 is forecast.
The share of income from farming increases with farm size (as measured by gross sales). “Large”
commercial farm households (farms with annual sales between $250,000 and $499,999), on
average, obtained 60% of their total household income from farming activities in 2007, while
“very large” family farms (farms with annual sales in excess of $500,000) obtained nearly 80% of
household income on-farm.11 These two classes of farms represented slightly less than 8% of
family farms. Intermediate family farms (farms with annual sales in excess of $100,000 but less
than $250,000) represented about 28% of family farms and obtained about 32% of household
income from on-farm sources. The remaining 64% of family 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.
Over the past decade, farm household incomes have surged ahead of average U.S. household
incomes (Figure 12 and Figure 13). In 2007 (the last year for which comparable data were
available), the average farm household income of $86,233 was nearly 28% higher than the
average U.S. household income of $67,609 (Table 2).
11 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.
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Figure 12. Comparison of Farm to U.S. Average Household Income Since 1960
$90,000
Average Farm
$75,000
Household Income
$60,000
$45,000
$30,000
Average US
Household Income
$15,000
$0
1960
1970
1980
1990
2000
Source: USDA, Economic Research Service, “2009 Farm Income Forecast,” February 12, 2009, at
http://www.ers.usda.gov/Briefing/FarmIncome/.
Note: 2008 is preliminary, 2009 is forecast.
Figure 13. 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
Source: USDA, Economic Research Service, “2009 Farm Income Forecast,” February 12, 2009, at
http://www.ers.usda.gov/Briefing/FarmIncome/.
Note: 2007 is the last year with comparable data.
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Farm asset values—which reflect farm investors’ and lenders’ expectations about long-term
profitability of farm sector investments—are projected up 1.6% in 2009 to a record $2,388
billion, on the strength of continued growth in real estate values. Farm debt is projected up
$2 billion from the previous year’s record to $217.1 billion in 2009. As a result, farm equity (or
net worth, defined as asset value minus debt) is projected at a record $2,171 billion, while the
farm debt-to-asset ratio in 2009 is expected to decline to a 50-year low of 9.1%. The U.S. farm
debt-to-asset ratio peaked in 1985 at 23%.
Figure 14. U.S. Farm Debt-to-Asset Ratio Since 1960
25%
20%
15%
Farm Debt-to-Asset Ratio
10%
5%
1960
1970
1980
1990
2000
Source: USDA, Economic Research Service, “2009 Farm Income Forecast,” February 12, 2009, at
http://www.ers.usda.gov/Briefing/FarmIncome/.
Note: 2008 is preliminary, 2009 is forecast.
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Table 1. Annual U.S. Farm Income Since 2002
($ billions)
Item 2002
2003
2004
2005
2006
2007
2008a 2009b
1. Cash receipts
195.0
215.6
237.2
240.9
240.8
284.8
324.2
294.6
Cropsc 101.0
109.9
113.6
116.0
122.6
147.0
181.1
162.4
Livestock 94.0
105.6
123.6
124.9
118.2
137.9
143.1
132.2
2. Government paymentsd 12.4
16.5
13.0
24.4
15.8
11.9
12.4
11.4
Fixed direct paymentse 3.9
6.4
5.2
5.2
5.1
5.1
5.2
4.9
CCPf 0.2
2.3
1.1
4.1
4.0
1.1
0.7
1.2
Marketing Loan Benefitsg 2.8
1.3
3.5
7.1
1.8
1.1
0.1
0.7
Conservation 2.0
2.2
2.3
2.8
3.0
3.1
3.2
3.2
Ad hoc and emergency
1.7
3.1
0.6
3.2
0.3
0.5
2.7
0.3
All otherh 1.9
1.2
0.2
2.1
1.7
1.0
0.6
1.1
3. Farm-related incomei 14.8
15.7
17.1
16.2
17.5
16.6
17.7
18.1
4. Gross cash income (1+2+3)
222.2
247.8
267.3
281.5
274.1
313.4
354.3
324.1
5. Cash expensesj
171.6
177.6
185.0
194.8
206.0
226.0
260.9
246.8
6. NET CASH INCOME
50.7
70.2
82.3
86.6
68.0
87.4
93.4
77.3
7. Total gross revenuesk
233.6
260.0
295.6
301.1
292.4
341.1
379.9
348.3
8. Total production expensesl
193.4
200.3
209.8
221.8
233.9
254.4
290.6
277.1
9. NET FARM INCOME
40.2
59.7
85.8
79.3
58.5
86.8
89.3
71.2
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 February 12, 2009.
a. Data for 2008 are preliminary and may still be subject to revision.
b. Data for 2009 are USDA forecasts.
c. Includes Commodity Credit Corporation loans under the farm commodity support program.
d. 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
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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.
e. Direct payments include production flexibility payments of the 1996 Farm Act through 2001, and fixed direct payments under the 2002 Farm Act since 2002.
f. CCP = counter-cyclical payments.
g. Includes loan deficiency payments (LDP); marketing loan gains (MLG); and commodity certificate exchange gains.
h. Peanut quota buyout, milk income loss payments, and other miscellaneous program payments.
i. Income from custom work, machine hire, agri-tourism, forest product sales, and other farm sources.
j. Excludes depreciation and perquisites to hired labor.
k. Gross cash income plus inventory adjustments, the value of home consumption, and the imputed rental value of operator dwellings.
l. Cash expenses plus depreciation and perquisites to hired labor.
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Table 2. Average Annual Income per U.S. Household, Farm versus All, 2002-2008
($ per household)
2002 2003 2004 2005 2006 2007 2008 2009
Average U.S. Farm Income by Source
On-Farm
Income
$3,477
$7,884
$13,564 $13,996 $8,750 $8,605 $6,511 $4,144
Off-Farm
income
$62,284
$60,713 $67,279 $67,091 $72,502 $77,618 $80,354 $80,996
Total
Farm
income
$65,761
$68,597 $80,843 $81,086 $81,251 $86,223 $86,864 $85,140
Average U.S. Household Income
$57,852
$59,067
$60,466
$63,344
$66,570
$67,609
na
na
Farm Household Income as Share of
U.S. Avg. Household Income (%)
114%
116% 134% 128% 122% 128% na na
Source: USDA, ERS Briefing Room: Farm Household Economics and Well-Being: Historic Data On Farm Operator Household Income, at http://www.ers.usda.gov/Briefing/
WellBeing/Gallery/historic.htm; as of February 12, 2009.
Table 3. Average Annual Farm Sector Debt-to-Asset Ratio, 2002-2008F
($ billions)
2002
2003
2004
2005
2006
2007
2008
2009
Farm Assets
$1,304.0
1,378.8
1,617.6
1,835.5
2,047.4
2,209.9
2,349.7
2,388.2
Farm Debt
193.3
175.1
183.0
193.2
196.4
211.5
215.1
217.1
Farm Equity
1,110.7
1,203.6
1,434.6
1,642.2
1,851.0
1,998.4
2,134.5
2,171.1
Debt-to-Asset Ratio (%)
14.8%
12.7%
11.3%
10.5%
9.6%
9.6%
9.2%
9.0%
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 February 12, 2009.
Note: 2008 is projected.
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Table 4. U.S. Prices and Support Rates for Selected Farm Commodities Since 2002
%
%
change
change
from
from
Loan
Target
Commoditya
Unit
Year
2003/04 2004/05 2005/06 2006/07 2007/08
2008/09Fb
2007/08c
2009/10F
2008/09d
ratee
Price
Wheat
$/bu
Jun-May 3.40 3.40 3.42 4.26 6.48 6.70-6.90 4.9%
— — 2.75 3.92
Corn
$/bu
Sep-Aug 2.42 2.06 2.00 3.04 4.20 3.65-4.15 -7.1%
— — 1.95 2.63
Sorghum $/bu
Sep-Aug 2.39 1.79 1.86 3.29 4.08 3.05-3.35 -21.6%
— — 1.95 2.57
Barley
$/bu
Jun-May 2.83 2.48 2.53 2.85 4.02 4.95-5.35 46.8%
— — 1.85 2.44
Oats
$/bu
Jun-May 1.48 1.48 1.63 1.87 2.63 3.00-3.20 17.9%
— — 1.33 1.44
Rice
$/cwt
Aug-Jul 8.08 7.33 7.65 9.96 12.80
16.00-17.00 28.9%
— — 6.50
10.50
Soybeans $/bu
Sep-Aug 7.34 5.74 5.66 6.43 10.10 8.75-9.75 -8.4%
— — 5.00 5.80
Soybean
oil ¢/lb Oct-Sep 30.0 23.0 23.4 31.0 52.0 31.0-34.0 -37.5%
— — — —
Soybean
meal $/st Oct-Sep 256.1 182.9 174.2 205.4 335.9 265-305 -15.2%
— — — —
Cotton,
Upland
¢/lb Aug-Jul 61.8 41.6 47.7 46.5 59.3 47.0-54.0 -14.8%
— — 52.00
71.25
Choice
Steers $/cwt
Jan-Dec 84.7 84.8 87.3 85.4 91.8 92.27 0.5% 86-92 -3.5% — —
Barrows/Gilts $/cwt
Jan-Dec 39.5 52.5 50.1 47.3 47.1 47.84 1.6% 46-49 -0.7% — —
Broilers
¢/lb Jan-Dec 62.0 74.1 70.8 64.4 76.4
79.7 4.3% 81-87 5.4% — —
Eggs
¢/doz
Jan-Dec 87.9 82.2 65.5 71.8 114.4 128.3 12.2% 119-126 -4.5% — —
Milk
$/cwt
Jan-Dec 12.52 16.05 15.14 12.90 19.13
18.32 -4.2%
10.95-11.65 -38.3%
— —
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 from World Agricultural Supply and Demand Estimates (WASDE) February 10, 2009;—= no value; and USDA’s out-year
2009/2010 crop price forecasts will first appear in the May 2009 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 2008/2009 and 2009/2010 are USDA forecasts.
c. Percent change from 2007/2008, calculated using the difference from the midpoint of the range for 2008/2009 with the estimate for 2007/2008.
d. Percent change from 2008/2009, calculated using the difference from the midpoint of the range for 2009/2010 with the estimate for 2008/2009.
e. Loan rate and target prices are for the 2008/2009 crop year. For more information, see CRS Report RL34594, Farm Commodity Programs in the 2008 Farm Bill, by Jim
Monke.
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Randy Schnepf
Specialist in Agricultural Policy
rschnepf@crs.loc.gov, 7-4277
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