U.S. net farm income is forecast to exceed $122 billion in 2012 and net cash income is expected to exceed $139 billion, both record nominal values.  The expected increase in income reflects large price-led gains in corn and soybean receipts as well as large increases in crop insurance indemnities.  Crop farm gains should be more than enough to offset livestock farmers' higher feed expenses and a decline in sales of wholesale milk.

Extreme hot and dry conditions in the Plains and Corn Belt are drastically cutting projected corn and soybean yields. With corn and soybean supplies for the 2012 marketing year expected to be the lowest in 9 years, prices are increasing dramatically, resulting in higher expected 2012 calendar-year receipts for many crops.

Farm equity is expected to increase to an all-time high of almost $2.3 trillion.  Farm asset growth in 2012 isexpected to exceed increases in farm debt as increases in the value of farm real estate and financial assets more than offset an anticipated rise in nonreal estate debt.  Farm real estate debt is predicted to decline slightly in 2012. Debt repayment capacity utilization (DRCU)--a measure of farm exposure to financial risk--is forecast to be at its lowest since 1970.

Median Farm Household Income Up in 2011 and Forecast Higher in 2012

Median total farm household income increased by 5.4 percent in 2011, to $57,067, and is expected to increase another 1.2 percent in 2012, to $57,762. Most farm households operate small farms and rely solely on off-farm income, which is forecast to rise 3.2 percent in 2012. In contrast to the farm households that operate small farms, households associated with commercial farms derive the majority of their income from farming activities. Their median income from farming increased an estimated 7.9 percent in 2011 to $84,697, and their total household income also increased by 7.9 percent, to $127,054.

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