Menu

by Lynne Finnerty

Farmers and ranchers already know a new farm bill is critical to their economic survival. But, in case others didn't, a recent Agriculture Department report on farm income shows that, without a new farm bill or another supplemental assistance appropriation, farm income would decline 15 to 20 percent in 2002.

The department's economists on Jan. 10 put out the farm income report based on the current legislative situation – no new farm bill and no supplemental assistance legislation. They "assumed that the only government payments that would be made would be those that are in the underlying 1996 farm bill," said the department's chief economist Keith Collins.

The report, USDA's first farm income forecast for 2002, showed net cash farm income was nearly $60 billion last year, but is expected to total about $51 billion this year. The 2001 number included more than $10 billion in government payments that are not included in the 2002 total. "Our analysts that put out these numbers do not assume any legislation in effect until it has been passed," Collins said.

The USDA's apples-to-oranges comparison shows just how imperative it is that we have a new farm bill within weeks, not months.

The good news is the economists anticipate no fundamental changes in the 2002 farm economy, and the farm income outlook is improving. Collins said the farm economy has been recovering slowly since it bottomed out at $34.2 billion in 1999, and farm income, excluding all government payments, is expected to be about $40.2 billion in 2002. "That's an 18 percent increase in net cash farm income, excluding government payments, since 1999," Collins explained.

He added that farm real estate values rose 3 percent last year, the debt-to-asset ratio was 15.8 percent at the end of 2001, which the economists consider "pretty good," and farm expenses will be under control in 2002 "for the first time in several years." Collins also said farmers' interest expenses are expected to be "down about half a billion dollars in 2002" and agricultural exports will be stronger.

Nonetheless, the report shows that Congress' passing a new farm bill for the 2002 crop year, or providing supplemental assistance, is essential to prevent a large drop in farm income. If Congress does not act soon, the next farm bill is not likely to take effect until the 2003 crop year.

Sen. Mitch McConnell, R-Ky., told attendees at the AFBF annual meeting in Reno, Nev., that he expected the Senate to complete a bipartisan farm bill "no later than March." And House sources said they are ready to conference the House-passed farm bill with a Senate bill five minutes after the Senate passes it. Farm Bureau will continue to work hard to turn these predictions into reality in order to ensure a stable farm economy in 2002.