Farmers’ 2013 income up, but so are production expenses
December 12, 2013
RICHMOND—This year’s net income for American farmers has exceeded $100 billion for the fourth time since 1973.
That’s according to the U.S. Department of Agriculture, which forecast 2013 net income at $129.7 billion. Net income measures the difference between cash expenses and the combination of commodities sold during the calendar year plus other sources of farm income.
It is down slightly more than 3 percent from 2012, but is still the fourth time net income, after adjusting for inflation, has exceeded $100 billion since 1973.
“That’s great news for some farmers, but not all farmers experienced that high of an increase in net income,” said Jonah Bowles, Virginia Farm Bureau Federation senior agricultural market analyst. “A lot depends on what they produced and how they marketed it.”
Production expenses continue to increase, according to the USDA, with labor and rent being the most expensive components. On a positive note, producers are expected to pay less for fuel and fertilizer.
“It’s worth noting that a farmer’s ability to pay his bills is directly related to the size of his bills,” Bowles said. “When there is money in the farmer’s pocket, it’s a good time to take on projects that will increase production, including increasing either the size or efficiency of the operation.”
That means that in a year of high net income, farmers usually re-invest that income into improving their operations. “Non-farmers don’t realize the amount of expenses needed to farm,” Bowles said. “In addition to ever-increasing inputs like fuel and fertilizer and feed, farmers have equipment costs like $300,000 combines that they need for their operations, and they never know what their income will be that year.”
And that is likely why the projected median farm household income is expected to remain unchanged in 2013, according to the USDA.
Media: Contact Bowles at 804-290-1117.