USDA's Economic Research Service (ERS) says U.S. net farm income is forecast to decline by almost $4 billion from its all-time high in 2011 to $114 billion and net cash income is expected to decline almost $2 billion to $132.8 billion. Both of these figures are lower than what ERS forecast in August. However, it states farm equity is projected to achieve a new record high in 2012 as expected growth in farm assets exceeds the expected increase in farm debt.
"Value of agricultural sector production is expected to increase with gains anticipated for crops, livestock and especially revenues from services and forestry sales. Larger gains are predicted for oil crops and other farm income," states ERS. "Solid gains in the projected annual value of U.S. agricultural production will be more than offset by increases in purchased inputs and payments to stakeholders. In particular, feed expenses are forecast to increase almost $10 billion in 2012.
- All major sources of farm income are expected to rise in 2012, with the largest gains expected for farm-related income due to both Federal and private insurance indemnity payments.
- The gains in forecast livestock and crop cash receipts come mostly from expectations of price increases. Oil crops and feed crops are the two leading commodities in terms of the farm sector's value of production.
- Higher receipts will be more than offset by increases in expenses, with feed and seed expenses rising the highest among expense categories.
- Increases in farm asset values are expected to continue to exceed increases in farm debt, leading to another new record high for farm equity.
- Farm financial risk indicators continue at near-historic low levels.
- A modest increase in direct government payments is anticipated in 2012.