Exports drive rebound in farm income

(By WILLIAM NEUMAN, Published in New York Times)
Total net farm cash income for the current calendar year was estimated at $85 billion, a 23 percent increase from last year and well above the 10-year average of $72 billion.
About 75 percent of farm production occurs on just 271,000 farms, or 12 percent of the total farms in the country. Those large commercial farms were forecast to average $220,000 in net cash income this year, a 22 percent rise from a year ago.
When all farms are taken into account, average farm household income is expected to be $81,670 this year, a nearly 6 percent increase from last year.
Household income for many who live on farms comes largely from off-farm jobs and other sources, like investments. This year, on average, 11 percent of the household income for farm families was predicted to come from agriculture.
Income from both farm and nonfarm sources is expected to rise this year, indicating an overall improvement in the rural economy, officials said.
Joseph Glauber, the agriculture department’s chief economist, said that a strong rebound in livestock and dairy prices had been a major factor in the farm recovery.
Dairy producers were hurt badly in the recession by high costs and low prices, which have recently begun to recover. Cattle and hog producers also struggled with low prices, caused by overproduction. But cattle and hog producers have managed to cut the size of their herds, pushing prices back up at the same time that international demand recovers, Mr. Glauber said.
“Exports are kind of driving our market,” said Jason Anderson, who operates a cattle feedlot in Holbrook, Neb. “Demand is pretty good, and we’ve seen about a $5 to $7 price rally just this month,” he said, referring to the price per hundredweight.
Economists said that the farm sector overall was not hurt as badly in the recession because farmers generally had better access to credit. At the same time, farms over all were not highly leveraged, putting them in a better position to withstand the economic storm.
“The farm economy in rural America has not suffered as severely as the industrial part of the economy and, because of the strong exports, the rural economy is recovering what it lost during the downturn,” said Roy Bardole, a farmer in Rippey, Iowa, and chairman of the Soybean Export Council.

Full article at http://www.nytimes.com/2010/09/01/business/economy/01exports.html?_r=1&th&emc=th

Our Take:
After a couple of shaky years when austerity was the rule, many farmers will see much needed revenue. After the essentials are paid for, we hope many can take some of these funds and participate in what continues to be the best economic development machine rural America has seen—ethanol production. The more farmer ownership in farm-based renewable energy, the stronger the foundation for farm-based energy becomes. As we saw in the volatility of the past two years, farmer-owned ethanol plants, in general were well set up to weather the storm.

We also would like to point out that in addition to the strength in the exports of grains and animal products, even US-made ethanol is seeing growing demand from overseas. While US officials dither about whether and when to increase the blend level of ethanol in gasoline to 15 percent, the world is showing that it is thirsty for high quality, renewable energy. We still hope to grow our domestic market, but ethanol export markets are a saving grace for the moment.


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