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2004 Net
Farm Income is Forecast to Top 2003 Record by More than $14 Billion
The values of both crop and livestock
production are forecast to increase in 2004, for only the fourth
time since 1990 (another being 2003). The
value of crop production is forecast to top the previous record
from 1996 by $3.1 billion, and the value of livestock production
is forecast to exceed the previous record from 2001 by $15.1 billion.
The combined value of production for
crop and livestock commodities is forecast to rise
a record $27.6 billion (13 percent) in 2004, following a $20.7-billion
(10.8 percent) increase in 2003. With this forecast, the value of
farm sector production, including income from forestry and services
earned on farm assets, will have risen
$50.1 billion in just 2 years.
Two consecutive years of exceptionally
large harvests for major crops and unusually high prices for livestock
and milk have created record earnings for the farm sector, and participants
who assume the risks of production (farmers, partners, and contractors)
have reaped the benefits. Net farm income is forecast to be $73.7
billion, exceeding the previous record set in 2003 by 25 percent.
farm Operator Households’ Incomes Continue to
Rise
The income earned by farm operator households
in 2004 will continue a multiyear string of increases. Average farm
household income for 2004 is forecast at $70,675 per household,
up 3.2 percent from last year. Despite declines in government payments,
increases in crop and livestock receipts are causing the farm income
component of total household income to rise.
The labor market continues to lag the
general economy in recovery, dampening growth in wages and salaries
for off-farm earnings. Hence, growth in income from the farm is
expected to outpace growth in income from off-farm sources, benefiting
farms that rely more heavily on the farm for income. Operators of
commercial farms are expected to realize the largest increases in
household income at 6.5 percent. A 2.5-percent increase is expected
in household income for intermediate farms, and a 2.2-percent increase
for rural residence farms.
| Related
Reports |
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ERS has traditionally estimated income of the farm
sector as a whole. Recently, ERS switched to estimating value
added for the farm sector and farm households, combining value-added
measurement concepts with farm-level production and cost information
from the USDA’s Agricultural Resource Management Survey (ARMS)
to develop a value-added account for each farm. For more information,
see these reports:
Agricultural
Income and Finance Outlook—In
2003, ARMS sampled 36,000 farm operators, doubling its sample
size compared to previous surveys and thereby making available
State-level estimates for 15 featured agricultural States. Farm operator households’ share of agriculture’s
net value added increased from 34 percent in 2002 to 51 percent
in 2003, with commercial farms accounting for almost 70 percent. Among the featured States, California
farms had the highest average household income while Indiana
farms had the lowest. For
2004, average net cash income is expected to increase for
the typical farm operation in 6 of the 9 USDA resource regions.
An increase is expected in household income in 2004 for the
average farm household for each of the three USDA farm typologies
(rural residential, intermediate, and commercial). The largest income gains expected in 2004 are
for farm operations specializing in livestock other than beef
cattle.
Income,
Wealth, and the Economic Well-Being of Farm Households—Using ARMS data, this analysis hinges on a new
concept of economic well-being that captures farm household
wealth and expenditures in addition to more conventional income
measures. The report also addresses pertinent policy issues,
such as whether farm households are inherently disadvantaged
and how their incomes, wealth, and household expenditures
compare with nonfarm households. While the economic well-being
of a vast majority of farm households appears favorable in
comparison to nonfarm households, between 6 and 21 percent
of farm households exhibit difficult circumstances. Many of
these households hold wealth in their businesses that could
be used to sustain consumption. However, lower income, lower
wealth households, many of whom appear to be beginning farmers,
have relatively low levels of consumption, low incomes, and
few resources to offset any unexpected income shortfall either
from farming or elsewhere.
Characteristics and Production
Costs—This series of reports examines how production costs vary
among producers of different commodities. The reports include
details derived directly from ARMS data on production practices
and input use levels (i.e., the technology set), as well as
farm operator and structural characteristics that underlie
the most recent cost and return estimates. The commodity-specific
surveys, conducted as part of ARMS every 5-8 years on a rotating
basis for each commodity, support annual commodity costs and
returns estimates, which are updated between surveys to reflect
changes in input costs and commodity prices and production.
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| Related
Data |
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 Farm
Business and Household Survey Data: Customized Data Summaries
from ARMS
— Use
this new dynamic web-based data delivery tool to learn about
agriculture online: farming practices, commodity production
costs and returns, the economics of the farm business, the
structure of American farming, and the characteristics of
the American farm household. Get tailored reporting on agricultural
production technology, farm business viability, and the structure
of U.S. agriculture from the very latest information gleaned
from ARMS—including, for the first time, data for 15
selected States as well as the nation as a whole. This new tool provides one-stop shopping, centralizing
access to all ARMS data, including that previously provided
in the Farm Financial Management and the Crop Production Practices
data products.
ARMS
Briefing Room— A synthesis of ERS research based on ARMS data.
For
Complete 2004 Farm Income Forecast Data, see the Farm
Income data product.
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For
the full 2004 forecast,
