February 16, 2007
February 16, 2007--In 2007, net farm income is forecast to be $66.6 billion in 2007, up $6 billion from 2006 and $9 billion above its average for the previous 10 years. This forecast comes from a newly released report put out by the U.S. Department of Agriculture's Economic Research Service.
Market prices for corn, wheat and soybeans are forecast to remain above 2006 levels. In addition, prices for sorghum and hay are projected to be higher in 2007 as higher prices for corn result in increased demand for these commodities as feed substitutes. The farm income forecast reflects an expected increase in the production of corn and declines in the production of soybeans and sorghum as high corn prices encourage farmers to switch production to corn.
The value of livestock production is forecast to be $125.7 billion, up $3.1 billion from 2006. Government payments to farmers are expected to total $12.4 billion in 2007, down from the $16.3 billion paid out in 2006.
In 2007, average farm operator household income (farm and off-farm earnings) is projected to be $81,588, up 2.2 percent from the income level forecast for 2006, and 8.1 percent above the five-year average for 2002-06.
On the farm, increases in crop cash receipts, livestock cash receipts and other farm income are projected to be partially offset by declines in government payments. When higher farm expenses are factored in, average net cash farm income is projected to be $17,271 in 2007, up 2.1 percent from the 2006 forecast.
However, not all this income is realized by the primary operator as household income. Income from any farm may be shared by other households. With adjustment for depreciation and additional earnings to the household from other farms, average operator household income from farm sources is projected at $11,488. Income from farm sources, projected at 3.4 percent above the 2006 forecast, would be 11.7 percent above the prior five-year average.
Average household income from off-farm sources is projected at $70,101, a 2-percent increase above the 2006 forecast and 7.6 percent above the prior five-year average. Income from off-farm sources is expected to be 85.9 percent of household income in 2007.
The full farm sector income forecast and the forecast for farm household income can be found at www.ers.usda.gov/Features/FarmIncome/2007/February/