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The U.S. government said it expects income on American farms to decline this year but remain near historically high levels.
The U.S. Department of Agriculture on Tuesday forecast net farm income to be $114 billion in 2012, down 3.3% from last year, after this past summer's severe drought curtailed corn and soybean production and led to higher costs for livestock and dairy farmers.
The USDA's forecast marks a shift from its projection in August, when it estimated that net farm income would rise 3.7%. The government said the change is due in part to reductions in the projected value of crops and livestock.
Over the summer, the drought caused prices for the nation's largest commodity crops, including corn and soybeans, to surge to record levels, a factor that the USDA had cited in August. But grain and soybean prices have cooled since then, due in part to lower demand for corn from ethanol producers and foreign importers.
The USDA also noted Tuesday that it now sees higher costs than it had expected in August for animal feed, which will weigh on the incomes of livestock and poultry farmers. The agency noted that prices for soybean meal, a source of protein for poultry and hogs, have risen significantly.
Net U.S. farm income has risen sharply in recent years. Last year's figure of $117.9 million was the highest since 1973 on an inflation-adjusted basis.
Write to David Kesmodel at email@example.comSubscribe to WSJ: http://online.wsj.com?mod=djnwires(END) Dow Jones NewswiresNovember 27, 2012 13:34 ET (18:34 GMT)DJ USDA Forecasts 3.3% Drop In 2012 Net Farm Income->copyright