2012 Farm Income Forecast
3 December 2012 
Information released in the 2012 farm income forecast from USDA’s Economic Research Service is derived from data from harvest, sales, and inventory. The current report was updated from August’s estimates. Although not the final forecast, as another will be released in February of 2013, Agriculture secretary Tom Vilsack remained positive.
The study showed that U.S. net farm income is forecast to decline almost $4 billion from its all-time high in 2011.
In addition, the value of agricultural sector production is expected to increase with gains anticipated for crops, livestock, and especially revenues from services and forestry sales. Larger gains are predicted for oil crops and other farm income.
Solid gains in the projected annual value of U.S. agricultural production will be more than offset by increases in purchased inputs and payments to stakeholders.
Farm equity is projected to achieve a new record high in 2012 as expected growth in farm assets exceeds the expected increase in farm debt. Debt repayment capacity utilization (DRCU)–a measure of farm exposure to financial risk–is forecast to tick upward while remaining at a near-historic low level.
Median Farm Income Rises
Median total farm household income increased 5.3 percent in 2011, to $57,050, and is expected to increase 1.0 percent in 2012, to $57,645. Most households, particularly those operating smaller farms, rely heavily on off-farm income, which is forecast to rise 3.4 percent in 2012. In contrast to the households that operate small farms, households associated with commercial farms derive more income from farming activities. Median income from farming increased an estimated 7.9 percent in 2011 to $84,649, and total household income also increased by 7.9 percent, to $127,009.
Agriculture Secretary Tom Vilsack made the following statement about the forecast:
“Today’s forecast is heartening. It confirms that American farmers and ranchers remained impressively resilient in 2012, even with tough odds due to one of the worst droughts in more than a generation. Thanks to its ability to remain competitive through thick and thin, U.S. agriculture is stronger today than at any time in our nation’s history, supporting and creating good-paying American jobs for millions. While down slightly from the August forecast, today’s estimates for net farm income are the second-highest since the 1970s, while total farm household income is expected to rise. At the same time, the positive trend of falling debt ratios continue. The forecast suggests that strong farm income should remain a positive factor in carrying farmers and ranchers into the 2013 growing season. But as one season comes to an end and another lies on the horizon, we must continue to stand with America’s farming families and rural communities, providing help and assistance to those who need it. This year, the farm safety net showed its mettle and merit, helping to deliver peace of mind to thousands of farmers and ranchers dealing with losses caused by natural disasters. It’s a reminder that Congress must do the same, and pass a comprehensive, multi-year Food, Farm and Jobs Bill that provides greater certainty for farmers and ranchers in the season ahead. Providing the tools and certainty they need is the least we can do for those who grow our food, fiber, feed, and fuel, even through the most challenging of times.”
The 2012 farm income forecast is available at www.ers.usda.gov/Briefing/FarmIncome/.
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