Farm income likely to plunge

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This summer could turn out to be a disaster for many of the nation’s farmers. Low livestock prices, and a widespread drought that is choking the life out of grain crops and pastures are to blame.

According to the USDA’s latest forecast, net farm income could drop by 23 percent this year. That’s the lowest level for farm income seen since the U.S. ag economy crashed in the mid-1980s.

For farmers in areas getting ample rain that’s good news as higher commodity prices mean they’ll receive more money for what they produced. However, for many farmers that’s just not the case. Drought has set back or devastated crops and pasture land throughout the western Plains and in the East.

In June, before the drought extended its grip, USDA had projected farm income this year would exceed $40 billion. Now, however, that expectation has been lowered to $35.2 billion — a decrease of $10.5 billion from 2001. Although the final numbers could fluctuate between now and harvest, and based on claims paid to producers carrying crop insurance, one thing is for certain, it is a tough year for agriculture.

The latest report could increase pressure on Congress and President Bush to approve a multibillion-dollar disaster assistance package. That’s something that earlier this year Bush had said he was against.

The new Farm Bill offers little support for producers incurring heavy losses this year as subsidy rates decline as production drops or prices rise. Currently USDA estimates that "loan deficiency payments," will drop from $5.5 billion last year to $2 billion in 2002.

Grain producers are not the only ones being hit. Livestock and dairy producers are suffering from low prices, too. Large supplies this year of beef, hogs, poultry and milk have reduced prices. The drop in price is due — at least in part — to the drought which has led more cattle to slaughter as producers have cut their herd size in order to try and feed the remaining few. USDA expects average milk prices to be at their lowest point since 1979.

Des Moines Register, Associated Press



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