LITTLE ROCK — Profits for U.S. farmers will drop more than expected this year, falling 38 percent from 2008 as the recession erodes demand for crops, livestock and dairy products, the government said Thursday.
Net farm income will sink to a seven-year low of $54 billion, down from a February forecast of $71.2 billion and last year's estimated total of $87.2 billion, the U.S. Department of Agriculture said in a report. Slumping farm product prices are outpacing lower costs for energy and feed, the department said.
The price of corn, the biggest U.S. crop, fell 46 percent in the past year, hog farmers lost an estimated $4.5 billion since September 2007, and dairy herds are being culled because of a milk surplus. Profits have declined for grain processors including Cargill Inc. and makers of farm equipment such as Deere & Co. and Agco Corp.
"Hogs were devastated by the H1N1 flu, and dairy isn't getting off the mat," said Bruce Babcock, the director of the Center for Agricultural and Rural Development at Iowa State University in Ames. "The outlook for crops is rosier."
Crop values will decline 9.8 percent to $164.7 billion, and livestock revenue will fall 15 percent to $118 billion, as input costs fall 6.4 percent, the Agriculture Department said.
The value of farm production for 2009, which includes rent, government aid and other benefits from agricultural operations, is projected at $322 billion, down 12 percent from last year, the department said.
The department plans to update its forecasts in November.
Business, Pages 30 on 08/28/2009