U.S. farm income will drop by almost 20 per cent this year compared with 2001 due to large reductions in government assistance and higher production costs, the Agriculture Department forecast last week. USDA's Economic Research Service (ERS) projected U.S. net farm income of US$ 40.6 billion (€45.5bn) in 2002, down from last year's revised forecast of $ 49.3 billion (€55.2 bn).
This year's U.S. net cash farm income was forecast at $ 50.9 billion, (€56.9 bn) down $ 8.6 billion (€9.6 bn) from last year. Net cash farm income represents the total amount farmers can receive this year, regardless of the year in which their crops were produced. Net farm income is the money taken in from this year's crop.
"ERS' first forecasts of 2002 farm finances indicate that the sector remains relatively strong," USDA said. USDA's estimates assume government payments at $ 10.7 billion (€11.9 bn) for the year and do not include any emergency supplemental assistance.
Last summer, Congress authorized $ 5.5 billion(€6.15bn) in farm payments to offset the fourth year in a row of low grain prices. U.S. farm production expenses were expected to reach $ 200 billion (€223bn) for the first time in 2002, up $ 650 million (€728bn) from last year, USDA said.
Sales of corn, soybeans and meat would continue to remain strong throughout the year, while cotton, rice and dairy products would see slight declines, USDA said. The drop in agricultural wealth comes as lawmakers work to overhaul U.S. farm law.
Last year, the House of Representatives passed a $ 73.5-billion (€82.3bn) farm bill that would run for an unprecedented 10 years. The Senate has still to pass its own farm legislation.