Net Farm Income Forecast Up Nearly 20 Percent in 2011

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The USDA Economic Research Service reports that Net farm income is forecast to be $94.7 billion in 2011, up $15.7 billion (19.8 percent) from the 2010 forecast. The 2011 forecast is the second highest inflation-adjusted value for net farm income recorded in the past 35 years. The top five earnings years for the past three decades have occurred since 2004, attesting to the profitability of farming this decade.

Net cash income, at $98.6 billion, is forecast up $7.3 billion (8%) from 2010, and $26.8 billion above its 10-year average (2000-2009) of $71.8 billion. Net farm income reflects income from production in the current year, whether or not sold within the calendar year; net cash income reflects only the cash transactions occurring within the calendar year. Net farm income is a measure of the increase in wealth from production, whereas net cash income is a measure of solvency, or the ability to pay bills and make payments on debt. Net value added is expected to increase by almost $18.4 billion in 2011 to $147.4 billion. The net value added of agriculture to the U.S. economy forecast for 2011 is also the second highest inflation-adjusted value recorded in the past 35 years, trailing only the 1974 value.