USDA Outlook for the 2012 U.S. Farm Economy

Transcription

1 USDA Outlook for the 212 U.S. Farm Economy Timothy Park & Kevin Patrick Farm and Rural Business Branch Resource and Rural Economics Division

2 SUMMARY Agriculture s strong financial performance is projected to ease in 212, with declines for all three measures of sector earnings. Net farm income is forecast to fall to $91.7 billion in 212, down 6.5 percent from the 211 forecast, but still the second highest nominal value on record. Increases in receipts for corn, most other feed grains, and peanuts are predicted to offset declines in wheat, hay, vegetables and melons, fruits and tree nuts. Cattle/calves and broilers are forecast up over 3 percent. Total expenses are projected to increase $12.5 billion (3.9 percent). Farm asset values are likely to increase by more than 5 percent for the third consecutive year. Debt is expected to rise 3.8 percent. The inflation-adjusted value of the farm sector s equity is expected to establish a new record high.

3 $ billion Value of agricultural sector production expected to increase $5.7 billion in Total value of production Crop Livestock Source: USDA, ERS Note: 211, 212 forecasts

4 $ billion 25=1 Real value of projected agricultural sector production in 212 is second highest in 3 years F Total value of production Crop Livestock Source: USDA, ERS Note: 211, 212 forecasts

5 Receipts for selected crops, F $ billion F 212F Corn Soybeans Fruits and nuts Vegetables Wheat Cotton Source: Economic Research Service, USDA F = forecast

6 Receipts for selected livestock products, F $ billion F 212F Cattle and calves Dairy Broilers Hogs Source: Economic Research Service, USDA F = forecast

7 Farm businesses represent almost 85, farms and account for 94 percent of production 9% 8% 7% 6% 5% 4% 3% 2% 1% % Farms Production Assets Debt 1,344,31 577,28 27,795 Rural Residence Intermediate Commercial Small farms whose operators report they are retired or they had a major occupation other than farming. Small farms with sales less than $25, whose operators report farming as their major occupation. Farms with sales greater than $25, and farms organized as nonfamily corporations or cooperatives. Farm Businesses Photo by: Daniel Marti Source: USDA, ARMS Note: 211, 212 forecasts

8 $ thousands 3 Average net cash incomes for 212 are expected to remain above F averages for crop farm businesses F 212F Cotton and rice Mixed grain Corn Specialty crops Wheat Soybeans and peanuts Other field crops Source: USDA, ARMS Note: 211, 212 forecasts

9 Average net cash income for livestock farm businesses expected to recede in 212 $ thousands F 212F Hogs Dairy Poultry Beef cattle Source: USDA, ARMS Note: 211, 212 forecasts

10 Incomes are expected to be up in the Prairie Gateway and the Northern Great Plains for 212 compared to average 212 Farm business net cash income forecast compared with F average Northern Great Plains 12.8% Northern Crescent -14.1% Fruitful Rim -14.3% Basin and Range.% Prairie Gateway 1.3% Heartland.7% Eastern Uplands -37.8% Southern Seaboard -25.6% Fruitful Rim -14.3% Mississippi Portal -14.3% Fruitful Rim -14.3% Source: ERS partial model based using the 21 Agricultural Resource Management Survey (ARMS) and parameters from the sector forecasts. The model is static and therefore does not account for changes in crop production impacts the occurred after the base year. F = forecast

11 $ billion 25 2 Government payments forecast up in 212 to $11 billion All other payments 1/ Conservation payments Function of crop price payments 2/ Fixed payments 3/ F 212F 1/ All other payments include disaster relief payments, tobacco transition payments, and dairy program payments. 2/ Counter-cyclical payments, loan deficiency payments, marketing loan gains, certificate exchange gains, and ACRE payments vary with crop prices. 3/ Production flexibility contract payments and direct payments are fixed by legislation. Source: FSA, NRCS, and CCC F= forecast

12 Cash expenses expected to continue to climb in 212 Percent 35 Annual percentage change in total cash expenses, F $ billion Percent increase from previous year Percent decrease from previous year Total cash expenses (right axis)

13 Changes in expense items, 211F 212F $ billion 6 3.5% 211F 212F % 3 -.2% -.1% 5.3% % 11.3% 4.9% 1.3%.7% 5.3% Pesticides Marketing Interest Fuels Seed Repairs Livestock & poultry Fertilizer Labor Misc. Feed Note: Percent change from 211 to 212 is indicated at the top of each set of bars. Source: Economic Research Service, USDA. F = forecast

14 $ billion 2,5 Real equity expected to establish new record in 212, value of assets at highest level since 198 Real farm sector assets, debt, and equity, F 1/ Equity Debt Assets 2, 1,5 1, Nominal farm equity is expected to be up 6 percent to $2.22 trillion. Nominal farm debt is also projected to increase in 212 to $254 billion, up nearly 4 percent F 1/ The GDP chain-type price index is used to convert current-dollar amounts to real (inflation adjusted) amounts (25 = 1). Source: Economic Research Service, USDA F = forecast

15 $ billion 25 Real debt relatively unchanged since 28 Real farm debt and ratios, F Percentage 3% 2 25% % 15% 1% 5 5% F 212F % Debt Debt to Asset Ratio (right axis) Debt to Equity Ratio (right axis) Source: USDA, ERS Note: 211, 212 forecasts

16 Net farm income expected to fall in 212 $ billion 212F Change from 211 Value agricultural sector production $414.5 $5.7 ( - ) Purchased inputs $235.1 $8.5 ( + ) Net government transactions -$1.8 -$.6 = Gross value added $ $3.3 ( - ) Capital consumption $32.5 $.9 = Net value added $ $4.2 ( - ) Payments to stakeholders $53.4 $2.1 = Net farm income $91.7 -$6.3 Source: USDA, ERS Note: 211, 212 forecasts

17 Dynamic Production Expenses, 28 to 212F Dynamic Bubble Charts 211F saw large production expense increases, smaller increases for 212 Examine changes over time in these expenses Four years of data on major expense categories Feed, Livestock & Poultry, Fertilizer X-axis is the percent change from the previous year Y-axis is the dollar change from the previous year Size of the bubble represents the item s share of total production expenses

18 Production expense changes, Dollar change from 27 $ billion 6 4 Feed Livestock & poultry Fertilizer & lime 2-15% -5% 5% 15% 25% 35% -2-4 Percentage change from 27

19 Production expense changes, Dollar change from 28 $ billion 6 4 Feed Livestock & poultry Fertilizer & lime 2-15% -5% 5% 15% 25% 35% -2-4 Percentage change from 28 Source: USDA, ERS Note: 211, 212 forecasts

20 Production expense changes, Dollar change from 29 $ billion 6 4 Feed Livestock & poultry Fertilizer & lime 2-15% -5% 5% 15% 25% 35% -2-4 Percentage change from 29 Source: USDA, ERS Note: 211, 212 forecasts

21 Production expense changes, 211F Dollar change from 21 $ billion Feed Livestock & poultry Fertilizer & lime 2-15% -5% 5% 15% 25% 35% -2-4 Percentage change from 21 Source: USDA, ERS Note: 211, 212 forecasts

22 Production expense changes, 212F Dollar change from 211F $ billion 6 4 Feed Fertilizer & lime Livestock & poultry 2-15% -5% 5% 15% 25% 35% -2-4 Percentage change from 211F Source: USDA, ERS Note: 211, 212 forecasts

23 SUMMARY Agriculture s strong financial performance is projected to ease in 212, with declines for all three measures of sector earnings. Net farm income is forecast to fall to $91.7 billion in 212, down 6.5 percent from the 211 forecast, but still the second highest nominal value on record. Increases in receipts for corn, most other feed grains, and peanuts are predicted to offset declines in wheat, hay, vegetables and melons, fruits and tree nuts. Cattle/calves and broilers are forecast up over 3 percent. Total expenses are projected to increase $12.5 billion (3.9 percent). Farm asset values are likely to increase by more than 5 percent for the third consecutive year. Debt is expected to rise 3.8 percent. The inflation-adjusted value of the farm sector s equity is expected to establish a new record high.

24 Briefing Room: Farm Income and Costs Farm Income and Costs Overview 212 Farm Sector Income Forecast 211 Farm Sector Income Estimates 21 Farm Sector Income Estimates Farm Business Income Assets, Debt, and Wealth Farms Receiving Government Payments Data Sources Recommended Readings Recommended Data Glossary Debt Landscape for U.S. Farms Has Shifted Sign up for ERS Charts of Note

25 USDA Outlook for the 212 U.S. Farm Economy Timothy Park & Kevin Patrick Farm and Rural Business Branch Resource and Rural Economics Division

26 Production expense changes, Dollar change from 25 $ billion 6 4 Feed Livestock & poultry Fertilizer & lime 2-15% -5% 5% 15% 25% 35% -2-4 Percentage change from 25

27 Production expense changes, Dollar change from 26 $ billion 6 4 Feed Livestock & poultry Fertilizer & lime 2-15% -5% 5% 15% 25% 35% -2-4 Percentage change from 26

28 Production expense changes, Dollar change from 27 $ billion 6 4 Feed Livestock & poultry Fertilizer & lime 2-15% -5% 5% 15% 25% 35% -2-4 Percentage change from 27

29 Production expense changes, Dollar change from 28 $ billion 6 4 Feed Livestock & poultry Fertilizer & lime 2-15% -5% 5% 15% 25% 35% -2-4 Percentage change from 28 Source: USDA, ERS Note: 211, 212 forecasts

30 Production expense changes, Dollar change from 29 $ billion 6 4 Feed Livestock & poultry Fertilizer & lime 2-15% -5% 5% 15% 25% 35% -2-4 Percentage change from 29 Source: USDA, ERS Note: 211, 212 forecasts

31 USDA Outlook for the 212 U.S. Farm Economy Timothy Park & Kevin Patrick Farm and Rural Business Branch Resource and Rural Economics Division