According to Bloomberg on August 27, A U.S. Department of Agriculture report today may show costs are accelerating as revenue growth slows, similar to a pattern that led to a 1980s farm crisis that was the worst since the Great Depression, said Gary Schnitkey, a University of Illinois farm economist. Corn, wheat and soybean prices are all at least 18 percent below their peaks.
Fertilizer, the second-biggest expense for corn and soybean farmers after land, is tied to spiraling energy costs, said Bob Young, chief economist for the American Farm Bureau Federation. Fertilizer costs doubled from a year ago, while fuel increased 62 percent, USDA data show. Expenses probably will surpass the $279.2 billion that the USDA estimated in February, eroding net income the government pegged at a record $92.3 billion for 2008, farmers and economists said.
"Income peaked this year," said Kurt Line, who owns or manages more than 6,800 acres of farmland near Momence, Illinois. "We should see a significant drop in 2009. For the number of dollars we will be risking the next two years, profit margins are not going to be robust."
Total farm income, a broad measure of revenue, rents, government aid and other benefits from agricultural operations, will be $371.5 billion this year, according to USDA estimates in February that will be revised in today's report. Adjusted for inflation, the figure is the highest since 1979. The USDA's first forecast of 2009 farm income will be made in November.
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