COLLEGE STATION — Large supplies of grain, coupled with low commodity prices will lead to projected United States net farm income of $40.4 billion in 2000 — down $7.6 billion from the amount estimated in 1999, according to a U.S. Department of Agriculture report.
Low commodity prices in 1999 led to a $1.7 billion drop in total crop receipts, with the $93.3 billion received the lowest amount recorded since 1994. Receipts for 2000 are projected to be down $2.1 billion for major field crops, though fruit, vegetable and greenhouse/nursery products will rise $1.2 billion.
“We expect prices for our major commodities — corn, sorghum, soybean, rice and cotton — all of them to be below the cost of production for the coming year,” said Dr. Carl Anderson, an economist with the Texas Agricultural Extension Service. “That will be the cutting end into the net income of crop farmers especially.”
Net cash income is forecast at $49.7 billion — $9.4 billion less than the preliminary estimate for 1999.
Crop farmers are not only faced with low commodity prices to start off the new year, but also a shortage of sub-soil moisture.
“The drought that has been in place since the mid-year still exists and now is becoming a growing concern not only to livestock and forage production, but now it’s going to become very important to crop farmers,” Anderson said.
“In the Harlingen area, they are preparing to plant here shortly in a few weeks. That side of it leaves us with a two-fold concern. One is everybody is faced with low commodity prices, and we are especially in the middle of a drought area.”
Anderson noted the outlook for beef producers is “upbeat” because of the low grain prices.
Dry weather has caused herd sizes to decrease across Texas, and feedlots are hoping to buy as many cattle as they can, said Dr. Ernie Davis, an Extension beef economist.
“There are more lighter weight cattle out there for two reasons: No. 1 is we don’t have the winter pasture because of the dry weather. And, No. 2, feedlots are looking at smaller herd numbers. They understand that they’ve got fewer feeder cattle, and they are scrambling to get them before they run out,” Davis said.
A decline in 2000 farm income will be partially offset by an increase in off-farm income, the Agriculture Department reports. Average farm household income is forecast at $59,350, down from an estimated $61,363 in 1999. However, that estimate is close to the 1998 level as farm operators’ household income has averaged about the same as U.S. household income during the past three decades.
“I’m one that thinks crop farmers will be looking at alternative sources of income,” Anderson noted. “We are fortunate in the large, middle part of Texas, that we have available off farm jobs. They can be quite a boost in terms of supplemental income.”
Clerical, teaching and health care professions give spouses options when earning off-farm income.
Anderson said producers are getting into jobs such as construction and truck driving.
“And the evaluation, Should I continue to farm or rent my farm out and take an off-farm job?’ are still very viable alternatives to consider,” he said.
Anderson said there is still a pattern where farms are growing larger and more efficient. Technological advances in row crop equipment is contributing to larger, efficient farming operations.
“Any time you’re looking at the type of equipment that is multi-row, such as 12 rows to 18 rows, are pretty common versus the six and eight row,” he said. “A decade before it was four-row equipment. That just requires a large operation. When you have large, expensive machinery, it has to be used in order to justify.”
For now, Anderson said he is using the word “bleak” to describe the outlook for farmers heading into 2000.
“One thing that could change things would be to have a drought or bad weather that holds back production,” he said. “It (a drought) is going to have to be bigger than Texas to put a dent in the big market.”