USDA's Schafer sees lower U.S. farm income in 2009
WASHINGTON, Nov 13 (Reuters) - Lower crop and livestock prices will mean a decline in U.S. farm and ranch income in 2009 after two record-setting years, Agriculture Secretary Ed Schafer said on Thursday.
Schafer told reporters the farm economy was in good health, with rising land values, record-high exports and a low debt load. It probably is "the best sector of the economy to weather the storm" of the financial downturn, he said.
"I think net farm income will go down next year," Schafer added. He declined to suggest by how much.
Net farm income is an Agriculture Department gauge of profitability. USDA pegged net farm income at a record $95.7 billion this year, up 10 percent from 2007, in a forecast released before the fall's abrupt slide in market prices.
Although market prices are down, growers say prices for machinery, fuel, pesticides, fertilizers, seed, land and labor are on the rise. By some measures, the market price for corn had fallen below the cost of production.
"I think we'll get to the position where agriculture can make some money. They're upside-down today," said Schafer.
By the spring planting season, prices for fuel and farm chemicals should be down, he said. Crude oil prices are less than half of their peak last summer.
Even with a softer economy, he said, "there is going to be demand out there" for food.
A week ago, the president of the largest U.S. farm group said he anticipated lower net farm income in 2009 and said there was anxiety in farm country.
American Farm Bureau Federation president Bob Stallman said it was important for the federal government to assure credit is available for agriculture and for producers to have ways to hedge their risks. Farming is a capital-intensive business.
Estimates of U.S. net farm income
(in billions of dollars)
Year Income
2008 $95.7
2007 $86.8 Continued...
