While much of America is worrying about the possibility of a double-dip recession, farmers are enjoying their best income year in decades. Farm profitability (U.S. net farm income) is expected to rise by 28% in 2011 compared to 2012—according to projections released last week by USDA.
U.S. net farm income this year is expected to reach $100.9 billion, and the amount of cash farms have available to pay bills is expected to top $100 billion—the first time both measures have done so. Crop sales are expected to pass the $200 billion mark for the first time in U.S. history, and double digit increases are expected in the amount of money farmers receive livestock sales in 2011.
Following is a commentary sent to the media in Iowa on December 9, 2012. It's from John Whitaker, state executive director for USDA's Farm Service Agency in Iowa. He offers information along with observations on trade and tax cuts and what this economic policy means for farmers and consumers.
U.S. farmers are having one of their best years for net farm income
Last week, we learned that farm income in 2011 is forecast by USDA economists to reach an all-time high, up 28% over 2010, signaling that American agriculture remains a bright spot in our nation's economy. The growth in farm income is also making a real difference for America's farm families as well as those in Iowa, whose household income was up 3.1% in 2010 and is forecast to increase 1.2% in 2011. And despite marginal increases in retail food prices, all American families still pay substantially less for food at the grocery store than residents of nearly every other country thanks to the productivity of our farmers. All told, this is good news for our national economy.
A combination of factors has made this growth possible, including strong returns on cash receipts and off-farm employment, strong yields despite weather setbacks, and record high farm exports, which continue to make U.S. agriculture one of the only sectors of our economy to log a trade surplus year after year.
Trade and tax cuts—they're important to keep the U.S. economy on track
Today, exports support nearly 10 million American jobs. Overall, U.S. agriculture supports 1 in 12 American jobs in all sorts of industries from picking and processing, to packing and shipping, to shelving at your local market. Farm exports support more than 1.1 million jobs here at home.
A few weeks back, President Obama signed into law a major piece of his jobs agenda: new trade agreements with Colombia, Panama and South Korea. These agreements will support tens of thousands of jobs here at home, put unemployed Americans back to work, and open new opportunities for American businesses. For America's farmers and ranchers, the trade agreements provide our best opportunity to build upon what has been a record year for U.S. agriculture. Combined, the agreements will generate an additional $2.3 billion in farm exports next year alone.
USDA believes America needs an economy that makes, creates, innovates and exports. And there is no better way to spur productivity than by putting more money back into the pockets of American families. The current payroll tax cut has given tax breaks to millions of families across the country this year, and now Congress is deciding whether it should be extended in 2012.
If the current payroll tax cut is not extended, taxes will go up on millions of people at a time when families are struggling to make ends meet. A typical household earning $50,000 a year will see their taxes increase by $1,000. The administration's plan would give the typical family earning $50,000 a year an additional $500, for a total tax cut of $1,500, providing assistance to middle class families at a time when many are still trying to get back on their feet.
For our part, USDA will continue to maintain a strong farm safety net, expand local and regional food systems, and promote greater export opportunities for U.S. agriculture, all designed to increase incomes for America's and Iowa's farm families. But to help rebuild an economy that restores security for the middle class and renews opportunity for folks trying to reach the middle class, we also need to invest in the middle class.