WASHINGTON (Reuters) - U.S. farm income this year was forecast to plunge 38 percent to $54 billion due to lower commodity prices for crops and livestock, the Agriculture Department said on Thursday.
Grain and livestock prices falling from record highs set in 2008 means farmers will see earnings slump by $33.2 billion in 2009 from last year’s near record net farm income of $87.2 billion.
The 2009 forecast was $9 billion below the 10-year average of $63.2 billion in net farm income.
The drop comes amid a global recession that has suffocated demand for many U.S. commodities, pushing prices well below their 2008 averages.
“With economic conditions deteriorating worldwide, demand for exports has tailed off, with few options available to expand marketing elsewhere,” the USDA said in its report.
“Sharply declining demand in 2009 has forced farmers to accept prices that are lower than were expected earlier in the year when production plans were made,” it said.
Net farm income is a USDA measurement of the value of production during the calendar year, whether it is sold or held in storage.
The USDA said cash receipts for most crops are expected to drop by $40.3 billion, led by a 19.6 percent cut in corn receipts.
Livestock, dairy, and poultry cash receipts are forecast to drop by 15.7 percent to $119 billion. Crop receipts would still be the second-highest on record in 2009, despite an $18 billion drop to $165 billion.
One positive in the farming sector is that expenses are forecast to decline from a record high posted last year, marking the first time costs have dropped since 2002.
Overall, expenses are expected to edge lower by $9.2 billion, or 3.2 percent, in 2009 to $280.8 billion, the second highest level ever.
The government also said direct government payments are expected to total $12.6 billion in 2009, a slight increase from $12.2 billion in 2008. This would be 20 percent below the 2004-2008 average.
Reporting by Christopher Doering; Editing by Lisa Shumaker
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