Record farm income likely as commodity prices rise

Rising prices for wheat, soybeans and other commodities should propel U.S. net farm income to a record $87.5 billion this year, up sharply from about $59 billion in 2006, the U.S. Department of Agriculture forecast Thursday.

“The higher prices available to U.S. farmers are principally resulting from strong demand from the domestic biofuels industry and from foreign buyers. As a result, farmers have lots of production to sell at high prices,” the USDA said in its farm income report.

The surge in demand for U.S. crops is partly the result of low rainfall in other countries, rising international consumption and a weak U.S. dollar that has boosted “farm-level prices to a level that more than offsets the increase in production costs.”

The USDA forecast that the value of production in the farm sector would rise more than $30 billion in 2007, the largest annual increase since 1984, to $148.5 billion, with many field crops posting record cash receipts.

Receipts from corn and soybeans -- the top two cash crops -- are expected to rise, with corn receipts reaching nearly $33 billion and soybeans $21 billion.

Receipts for wheat and rice are expected to rise to all-time highs of $10 billion and $2 billion, respectively. Receipts for vegetables are expected to rise more than $2 billion. But receipts for cotton, fruit and nuts are expected to decline in 2007.

Production costs also are soaring. Total production expenses are forecast to increase $21.7 billion to a record $254.2 billion in 2007, the result of higher feed, labor and fertilizer costs.