All indications point to 2011 as a record-setting year for farm income.
A new report from the Agriculture Department forecasts that net farm income will top $100 billion for the first time ever.
“That’s one part of the story and production expenses have also increased,” said Matt Erickson, an American Farm Bureau Federation economist.
“Net farm income is actually supposed to increase 28 percent this year, but on the other hand, production costs are also supposed to increase,” he noted.
Year-over-year, production expenses exceeded $300 billion for the first time and are expected to be at $320 billion, a 12 percent year-over-year increase.
Erickson says high commodity prices, high demand and tight stocks have all added up to the big year, but the USDA report shows it will also be a costly one.
Overall expenses for 2011 for the U.S. ag sector are expected to increase by 23 percent for feed costs for livestock producers, 28 percent for fertilizer and 27 percent for fuels. Seed and other miscellaneous costs are up as well.
Another area that’s adding up to a big expense for farmers is land, with a 25 percent increase in farmland values—the largest increase since 1970. In northwest Iowa, land values recently reached $16,000 per acre.