Farm income jump can’t keep up with production cost leap
WASHINGTON, D.C. - High
interest rates, large supplies of
n meat and grams, the strong dollar,
and weak consumer demand have
limited the advance of farm cash
receipts this year, reports USDA’s
Economic Research Service.
Total cash receipts m 1981 are
expected to be 4 to 6 percent above
1980. Receipts may rise 2 to 4
percent for livestock and 6 to 8
percent for crops.
At the same time, farm
production expenses will likely
increase 8 to 10 percent in 1981,
with interest and energy-based
inputs rising the most.
With increases m production
expenses outstripping gams m
cash receipts, farmer’s net cash
mcome will probably fall below
last year’s level.
Net income before inventory
adjustment is now projected at $l7
to $2l billion, compared with $21.9
billion in 1980. However, with this
year’s larger crops, net farm in
come after inventory adjustment
is forecast at $2O to $24 billion—a
slight improvement over last
year’s $19.9 billion.
Farm prices slowly [drifted
downward through July) while
prices for production items were
stable.
In the short run, changes in the
ratio of the index of prices received
by farmersto the index of prices
paid (for production items, in-
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terest, taxes, and farm wages)
generally -parallel changes m
realized net farm income. This
ratio has declined or been steady
each month since December 1980.
In mid-July, commodity
markets reacted to the favorable
growing weather across the
country. Farm prices of most
crops slipped, as the potential for
record 1981/82 output became
apparent. Meanwhile, livestock
prices remained fairly flat through
the first three quarters of the year.
At the same time, prices for
inputs and debt servicing con
tinued to climb with the general
rate ot mlldUun, causing a squeeze
on farmers’ cash flow. Tight cash
flow is expected to continue m the
fourth quarter and mto thd ‘first
quarter of 1982, as crop prices keep
falling, livestock prices remain
flat, and prices paid by farmers
move higher.
Direct government payments
constitute a small portion of gross
farm receipts—less than 1 percent
in 1980. Payments through the first
half of 1981 totaled about $761
million. Total direct government
payments for calendar 1981 are
forecast between $1.4 and $1.6
billion—up from $1.3 billion m 1980.
In the first quarter alone,
payments to fanners and ranchers
were about $557 million. More than
half of this represented disaster
payments to wheat, rice, cotton.
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FLEX AUGERS, 4", 6" & 8" AUGERS
and feed grain tanners hit by last
year's drought Producers
received about $2OO million in
disaster payments in the first half
of 1981. Feed gram producers,
many in the South, received about
$lOO million in disaster provisions;
wheat producers, $2O million, and
rice farmers, about $1 million
Last year’s dry weather also
affected livestock ranges and
pastures, with the feed condition
index 20 points or more below
average in many areas. As a result
of last fall’s poor grazing,
payments t h rr>njjh tV crrc'-^ncv
Sen. Huddleston to
Farm Bureau annual meeting
PARK RIDGE, 11. - US Sen.
Walter Huddelston from Kentucky,
the ranking minority member on
the Senate Agriculture Committee,
will address the morning general
session of the American Farm
Bureau Federation’s 63rd annual
meeting in San Diego, California,
Tuesday, January 12,1962.
As floor manager of the Senate
Farm Bill, Senator Huddelston has
been a key figure on the
Senate/House Conference Com
mittee seeking to develop 1962
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livestock feed program amounted
to nearly $250 million—the largest
single payout for the first half of
1981. Other programs with large
payments in the first half of the
year include the agricultural con
servation program, $9O million;
the Wool Act, $36 million; and
forestry incentives, $6 million.
Storage payments for the far
mer-owned grain reserve were
about $3l million through the first 6
months. High feed gram prices in
the first two quarters of 1981 led to
calling of reserves, forcing
farm program legislation that will
preserve the market system and
meet budget restraints of the
Economic Recovery Program.
Huddelston, who has
represented his native state in the
Senate since 1973, began his
political career by election to the
Kentucky state Senate in 1965. He
was reelected in 1969.
In 1973 he entered the U.S.
Senate after becoming the first
Democratic Senator elected to
serve the Commonwealth of
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mcasttr Farming, Saturday, November 21,1981—C7
address
Kentucky in 16 years. In addition to
the Agriculture Committee, he
currently serves on the Ap
propriations Committee, In
telligence and Small Business
Committees of the Senate.
After serving in the Army as a
tank gunner in Europe during
World War 11, he attended the
University of Kentucky, earning a
B.A. degree in radio arts in 1949.
He then entered the broadcast field
as sports and program director for
WKCT radio in Bowling Green. He
later was general manager of
station WIEL in Elizabethtown. He
is past president of the Kentucky
Broadcasters Association.
tobacco yield
Md.’s
and production up
COLLEGE PARK, Md. The
harvesting of tobacco in Maryland
is over and curing operations are
underway.
It is estimated that 23,000 acres
of tobacco would be harvested this
year. Yield is expected to be 1,300
pounds per acre and production
29.9 million pounds. Yield and
production, figures were revised
upward by the Maryland-
Delaware Crop Reporting Service
(from 1,150 pounds and 26.5 million
pounds, due to respectively very
good weather and growing con*
ditions). Even at last years prices,
the potential value of Maryland’s
1981 tobacco crop is over |5O
million, reports University of
Maryland’s Pradeep Ganguly.
It may be noted that three other
states - North Carolina, South
Carolina and Virginia - are
growing “Maryland Type”
tobacco. Early data from the
U.S.D.A., indicate that this year
these states have harvested over
11,000 acres for nearly 15 million
pounds; that is more than one-half
of Maryland’s estimated
' production.
Part of this out-of-state
‘Maryland type’ tobacco has
already been marketed, mostly
untied (on sheets), at prices up to
|1.75 per pound. Maryland’s cured
tobacco will not be sold until next
spring, and it is too early to predict
the effect of this development on
' the price of Maryland tobacco.
Maryland tobacco farmers
received, on an average, a 30 cent
per pound pnce increase for their
1980 crop. This year’s crop when
sold in Spring 1982 will probably
bring a smaller price increase, if
any.
Two factors could be cited as
reasons. First, a relatively weaker
demand due to faltering exports
(both domestic and foreign
demand have been strong in past
years). Second, a larger ’potential’
market supply due largely to the
production and marketing of
‘Maryland type’ tobacco in other
states.
producers to sell out of storage and
refund unearned payments.
However, a large influx of wheat
from the record-large 1981 crop
offset these paybacks, leaving net
reserve payments up for the first
half of the year.
The second half of 1981 should
see equally large payment ac
tivity Deficiency payments to
wheat producers alone are
projected to total about $4OO
million—the result of poor market
prices due to the large 1981 crop
and slower-than-expected exports.