Higher incomes give farmers reason to be thankful

November 16, 2004

Higher incomes give farmers reason to be thankful

WEST LAFAYETTE, Ind. - Farmers in Indiana might need a calculator to count their blessings this Thanksgiving. Average net income per farm is expected to reach $25,679 in 2004, the highest level in nearly a quarter century, said Chris Hurt, Purdue University agricultural economist.

"Across the country, net farm income is expected to reach nearly $74 billion, according to U.S. Department of Agriculture estimates," Hurt said. "This is about 24 percent higher than the previous record set just a year ago in 2003.

"So how does this pan out for a farm belt state like Indiana? We estimate Indiana's total net farm income will exceed $1.5 billion."

The state's record net income per farm was $53,559, set in 1973. In recent years Indiana's average farm income reached $25,000 twice - in 1996 and 1997. Two years ago average income was just $6,539 per farm, however.

Average income figures are in 2004 dollars and adjusted for inflation.

Both crop and livestock producers are enjoying profitable income years, Hurt said.

"Record corn and soybean yields headed the list of positives this year," he said. "Indiana corn yields are estimated to be 169 bushels per acre, with soybeans at 53 bushels per acre. Corn yields are 25 bushels higher than expected, while soybeans are 8 bushels above preseason yield expectations. While vast production, both in Indiana and across the country, has driven corn and soybean prices much lower, government farm programs cushion the blow."

Farm subsidies have provided price protection worth about $2 per bushel for corn and $5.10 a bushel for soybeans for Indiana farmers, Hurt said.

"The value of the extra yield and price protection from the government program is worth approximately $500 million, or about one-third of the state's estimated farm income," he said.

The year also is ending on a high note for livestock and dairy producers, Hurt said.

"The price received for milk at the farm will set new records this year, and beef cattle prices will be near new highs, as well," he said. "Hogs represent the largest animal enterprise in Indiana and, while hog prices were not at records, producers had favorable profits. Poultry prices and returns also were strong."

Hurt expects total net farm income to dip in the coming year but continue to remain strong. He projects total Indiana net farm income of $982 million in 2005.

"We don't know anything about the 2005 crop year as of yet, but we would expect a return to normal yields. If that happens it would mean a decline in farm revenue," Hurt said.

"We also expect milk prices to be lower, as well as hog prices. Beef prices probably will remain relatively unchanged."

Writer: Steve Leer, (765) 494-8415, sleer@purdue.edu

Source: Chris Hurt, (765) 494-4273, hurtc@purdue.edu

Ag Communications: (765) 494-2722; Beth Forbes, forbes@purdue.edu
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