C32—Lancaster Farming Saturday, September 27,1980
LITITZ Even without
this summer’s drought, it
would have been a
frustrating year for U.S.
agriculture, says USDA,
economist George Hoffman.
The reason: fanners are
keeping less of every sales
dollar' than they did last
year.
Although the figures are
far from final, forecasters
expect 1980 net farm income
to skid to a three-year low of
$2B to $25 billion. That’s
down about a fourth from
1979’s estimteds3l billion.
This summer's pickup in
farm prices in response to
the hot, dry weather helped
ease the situation'some, but
not enough to substantially
alter this year’s picture,
Hoffman says.
The problem is that record
sales and higher average
prices do farmers little good
when the extra dollars fail to
cover even greater increases
in production expenses.
This year, farmers total
production expenses may
rise 10 to 12 percent from last
year, Hoffman estimates.
That’s a stiff increase, and
all the worse because it
follows right on top of an 18
percent jump in farmers’
1979 expenditures.
Sharply higher costs have
taxed most fanners beyond
their ability to economize by
cutting back or postponing
purchases. Fuel ex
penditures and short-term
interest costs may increase
30 percent or more for the
year, though only modest
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Farm
gains are found in costs for
farm-origin inputs (mostly
feed and feeder livestock).
On the other side of the
equation is gross farm in
come. Overall cash receipts
to livestock and poultry
producers are not expected
to increase much this year.
However, crop receipts may
rise by a tenth, and total 1980
receipts for the farm sector
mil hit a new record.
Government payments to
producers may also rise.
However, the bottom line
is that cash receipts from
crop and livestock
marketings will not keep
pace with production ex
penses.
' The rise in cash receipts
for the entire farm sector
may only total 4 to 6 percent,
with receipts reaching an
estimated $137 to $l4O billion
for 1980, Hoffman says.
Adding in government
payments and other income
items will mean gross farm
Income of around $155
billion, leaving net income in
the $23 to $25 billion range.
Although national net
farm income is an important
measure of financial returns
throughout agriculture, the
figure lumps all fanners
together, ignoring dif
ferences in the well-being of
individual fanners, Hoffman
says.
Some farmers, for
example, lost an entire crop -
perhaps representing a
whole year’s income - to the
summer drought, others who
escaped the . drought
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income slumps
benefited from the sub
stantial pickup in market
prices. Many will continue to
benefit the deterioration in
overall crop prospects
should add lasting price
strength to several 1980
crops.
Besides weather, such
factors as commodities
produced, tenure and debt
status, reliance on pur
chased inputs, and depen
dence on off-farm income
also help determine who’s
hurting and who’s not.
Producers of wheat, com,
tobacco, and cotton will
probably show the biggest
gains in receipts from- last
year. Modest increases are
expected for soybeans,
fruits, vegetables, and other
crops.
likewise, the effects of
higher input prices vary
among crops. Energy
intensive crops have the
greatest increases in cash '
costs. For example, cotton,
sorghum, and other crops in
1
the southwest use con
siderable energy for pum
ping irrigation water.
Similar differences apply
among livestock and poultry
producers, although - in
general - they’ll probably
not do as well as crop
producers in 1980.
Production costs are up, and
total receipts will show little
to no increase tfcs year,
Hoffman says.
As noted, farm income is
not the only measure of a
farmer’s financial situation.
For instance, farm families
who count on off-farm jobs
for a large part Of total
family earnings may be less
vulnerable to fluctuatons in
farm income.
A third of all U.S. farms
rely on off-farm jobs, for
more than 90 percent of
' family income. Thest farms
earn less than $2,500 in
annual gross farm product
sales, and, altogether, they
receive less than ohe percent
of all cash receipts going to
in 1980
agriculture. Over half of the help in dealing with down*
tarm sector s total income turns in the farm economy,
comes from off-farm But this year’s economic
sources. ' slump isn’t confined to the
Off-farm jobs may be of (Turn to Page C 33)
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