“Farmers are rich” is a popular search topic on the website, www.corncorps.com, says this Illinois farm organization. “Farmers live off the government” is a common perception, according to recent Barron’s articles.
A September 9, 2013 Bloomberg Business report reflects both sentiments: “A Depression-era program intended to save American farmers from ruin has grown into a 21st century crutch enabling affluent growers and financial institutions to thrive at taxpayer expense. Federal crop insurance encourages farmers to gamble on risky plantings in a program that has been marred by fraud and that illustrates why government spending is so difficult to control.”
There are many opinions about U.S. farm policy and farming methods, and possibly even more misconceptions about farming. Many Americans are concerned about the impact of the current drought in the West on farming and fear rising prices for fruits, nuts, vegetables and beef, but few understand what is happening to agriculture across the entire country presently.
Net U.S. farm income in 2015 is forecast at $73.6 billion, which is down 32% from 2014 farm income of $108.0 billion, according the USDA Economic Research Service (ERS) in two February 2015 reports. After six “very good” years, starting with 2009, net farm income this year is forecast to be same as the average of the six years preceding 2009.
Government payments to farmers, including crop insurance and livestock indemnities, are expected to rise about 15% to $12.4 billion in 2015, which is the highest level since 2010, but about half the level of 2005 disbursements, according to the ERS. This translates into government payments to farmers in 2015 that will comprise 3% of their gross farm income and 17% of their net farm income.
The U.S. Government Accountability Office estimated that 37% of farms did not receive any type of federal subsidies during the five years prior to the current Farm Bill taking effect in 2014. Most of those not receiving payments were producers who did not apply for any form of assistance; usually they were small producers who relied mostly on other sources of family income or raised crops not covered by the previous Farm Bill.
American agricultural exports account for about a third of income from farming activities. Farm exports are expected to be lower overall in 2015.
A number of factors contribute to reduced foreign purchases of American farm products, including but not limited to a strong American dollar, refusal by some countries to purchase grains if they contain GMOs or meats if they come from animals where diseases such as avian flu are suspected, a large current supply of grain worldwide and political disputes with some countries that have imported American products in the past.
Meanwhile, farming input costs for 2015 were estimated by the ERS to rise about 1% this year. Some fertilizer and fuel prices decreased recently, but seed and herbicide prices have decreased little, if any.
The currently lower fuel costs, if they hold, will not show up immediately in supermarket prices, because getting most crops from planting to market distribution takes at least a year, and more than that for biennials and perennials.
The production of milk from dairy animals, and meat from beeves takes nearly three years from gestation to market. Poultry, pork and fish take less time to reach the dinner table, but still longer than many consumers understand.
2015 net income from farming is forecast at $15,851 per farm household, with another $97,400 from off-farm sources like jobs and investment earnings. Despite the current negative impacts on farm income, the average farm household income of $113,251 is considerably above the average U.S. household income, which was $72,641 in 2013, the latest year for which data about all U.S. households are available.
The average farmer usually owns land and other assets, most of which are necessary for production, but requires non-farming income to make the farming operation work successfully. Few Americans know working two jobs is almost a requirement to farm.
How Americans think about farming is important for farmers to understand. Ninety-eight percent of the populace is not engaged in farming.
The few who are farm owners or operators are remnants of decades of “survival of the fittest,” and most have needed an incredible work ethic and careful financial planning to get to where they are presently.
The majority of agriculturalists care about how they produce food and fiber and if they can pass along their land and assets in better shape than when they acquired them. Their voices need to be heard.
How agricultural producers inform the rest of the country’s residents about their agrarian livelihoods is a key to their economic survival. Even if some information about agriculture is less than fully positive, providing complete and accurate information is a big deal.
The next two weekly articles will expand on this topic and offer recommendations about what farmers can do to improve the image of farmers.
Dr. Rosmann welcomes readers’ comments; go to the website: www.agbehavioralhealth.com.