Farmland prices and farm income provide a bright spot in the U.S. economy. How is agriculture trending?
Farmland values and farm income rose sharply as U.S. agricultural exports reached a record high of $137.4 billion in fiscal year 2011, according to the latest report from the U.S. Department of Agriculture.
“Today’s farm income forecast shows that the American brand of agriculture continues to be a bright spot in our nation’s economy, said Agriculture Secretary Tom Vilsack in a statement announcing yesterday’s release of the USDA’s 2011 Farm Income Forecast.
The USDA forecast a 28 percent year-over-year in net farm income – for the second consecutive year - and predicts that 2011 earnings will reach a record high of $100.9 billion, despite the recent slide in crop prices. Farm household income, which rose 3.1 percent in 2010, is forecast to rise 1.2 percent in 2011. Net farm income reflects income from agricultural production in the current year, whether or not sold within the calendar year.
“This is good news for rural America and for our national economy,” said Vilsack. “A strong U.S. agricultural economy means more opportunities for small business owners and jobs for folks who package, ship and market agricultural products.”
Strong farm income is also good for farmland values. The Federal Reserve Bank of Chicago reported a 25 percent year-over-year gain in agricultural land values for the third quarter of 2011. The gain was the largest in more than three decades, said the Chicago Fed in its November AgLetter, which predicts farmland values and farm income will continue to rise in the fourth quarter of 2011, as well.
“Demand to acquire farmland this fall and winter looked to remain strong,” said the Chicago Fed. “Elevated levels of farm income and heightened demand for farmland continued to support further gains in agricultural land values,” said the Chicago Fed.
Demand appeared to be particularly strong among farmers, but banks surveyed by the fed also expected non-farming investors to buy farmland in the next three to six months.
Farmland values in the seventh Federal Reserve District, which includes Michigan, Ohio, Wisconsin and Illinois, showed their largest rise since 1977. Iowa led the region with a 31 percent year-over-year increase in farmland values. Since hitting bottom in 1986, farmland values in the region have grown at a compounded annual rate of 5 percent.
October corn and soybean prices are 37 percent and 17 percent higher, respectively, than last October. Livestock prices are up as well. Prices for hogs, cattle and milk were 29 percent, 22 percent and 7.6 percent higher, respectively, this October than last.
The Federal Reserve of Kansas City reported a more than 25 percent increase in farmland values – the strongest year-over-year increase in survey history - and a more than 14 percent increase in ranchland values in the third quarter of 2011, compared to the same period last year, despite severe drought in Oklahoma and areas of Kansas, Missouri and Colorado.