Highlights of Recent Farm Sector and Rural Economy Performance

Transcription

1 COUNCIL OF ECONOMIC ADVISERS Highlights f Recent Farm Sectr and Rural Ecnmy Perfrmance Rural cmmunities and ur natin s agriculture sectr embdy the American value that hard wrk and dedicatin shuld be rewarded. Rural America cntributes t ecnmic grwth, a strengthening Middle Class and building America s cmpetitiveness fr the future. The past five years represents ne f the strngest perids in ur Natin s farm ecnmy. Nt nly des American Agriculture put fd n the table f American families at affrdable prices and prvide raw material fr a range f vital purpses, it als supprts ne ut f every twelve jbs in the ecnmy. The hard wrk dne n the farm is felt thrughut ur ecnmy, particularly when agriculture is thriving. The Farm Bill ffers an pprtunity t build n recent prgress in the farm sectr and rural ecnmy nted belw. The Farm Bill prvides lng-term certainty abut the next five years f U.S. farm plicy fr America s farmers, ranchers and prducers. The Farm Bill als bsts trade and hnrs ur cmmitments while helping ur farmers and ranchers exprt a recrd amunt f prduct arund the wrld. The imprtance f the Farm Bill ges well beynd the rle f agriculture, by prviding technical assistance and financing fr lng-term investments in the future f rural cmmunities. The Farm Bill als facilitates investments in lcal and reginal fd systems, and the develpment f ecnmically-imprtant lcal markets and fd hubs. FARM SECTOR PERFORMANCE Net farm incme is frecast t be $131 billin in 213. After adjusting fr inflatin, 213 s net farm incme is up 46% percent frm 28 and is expected t be the highest since Billins f 213 $ Net Farm Incme, Nte: Data fr 213 are frecasts. Surce: USDA Ecnmic Research Service. 1

2 Net cash incme which measures the difference between cash expenses and the cmbinatin f cmmdities sld during the calendar year plus ther surces f farm incme is frecast at $129.7 billin, up 37% in real terms since s frecast wuld be the furth time net cash incme, after adjusting fr inflatin, has exceeded $1 billin since Almst all f this grwth in U.S. agricultural utput was due t increased prductivity grwth. All States cntribute t agricultural prductin, which exceeded $444 billin in 212. By 211, ttal farm prductin was nearly 1.6 times larger than the value f prductin in 1948, and U.S. ttal agricultural utput grew at an average annual rate f 1.49 percent ver this perid. Values f livestck and crps are rising. In 213, the value f livestck prductin is expected t be 2% higher in 213 than in 28. The natinal value f crp prductin is expected t be nearly 17% higher in 213 cmpared t 28 levels. Median farm husehld incme increased each year frm 28 t 212. The increase largely reflects greater incme frm ff-farm surces, where mst farm husehlds earn all f their incme. In 213, prjected median ttal farm husehld incme is expected t remain essentially unchanged, at $68,414. Median Farm Incme, Median Off-Farm Incme, & Median Ttal Incme f Farm Operatr Husehlds, $ per year 8, 7, 6, 5, 4, 3, 2, 1, -1, Median farm incme Median ff-farm incme Median ttal incme Nte: Differences between 212 estimates and estimates frm prir years reflect changes in survey methdlgy and implementatin assciated with the 212 Agricultural Resurce Management Survey in additin t changes in the ecnmic situatin f farm husehlds Surce: USDA, Ecnmic Research Service and Natinal Agricultural Statistics Service, Agricultural Management Survey. Michigan cntributed ver $9.3 billin t the Natin s value f agricultural prductin in 212, ranking 18 th amngst the 5 States. After adjusting fr inflatin, the State s value f prductin in 212 is up mre than 16% percent frm 28. 2

3 Mst f the value f Michigan s agricultural prducts are feed grains, milk and ther dairy prducts and ilcrps. Michigan ranks 4th in value f sales fr cut Christmas trees, 7 th fr fruits, trees nuts, and berries, and 6 th fr nursery, greenhuse, flriculture and sd. Increases in farm asset values are expected t cntinue t exceed increases in farm debt, leading t anther new recrd high fr farm equity in 213. The mst imprtant factrs affecting the value f U.S. farm sectr assets, debt, and wealth (equity) in 213 are net farm incme and brrwing csts. Farm asset values are expected t have risen 7 percent in 213. The prjected rise in farm sectr assets in 213 is due mainly t an expected 7.5-percent increase in the value f farm real estate. Farmland values are expected t cntinue rising, given the relative strength f cmmdity prices, accmmdating interest rates, and expectatins f cntinued favrable net returns bth frm the market and frm gvernment prgrams, including crp insurance. Cnfirming the strength f the farm sectr's slvency, bth the debt-t-asset rati and debt-tequity rati are expected t reach histric lws in 213. The farm sectr's debt-t-asset rati is expected t cntinue its decline, falling frm 1.7 percent at the end f 212 t 1.3 percent by the end f 213. The debt-t-equity rati is expected t decline frm 12. percent in 212 t 11.5 percent in 213. With such histrically lw levels f debt relative t assets and equity, the sectr is better insulated frm the risks assciated with cmmdity prductin. These risks include adverse weather, changing macrecnmic cnditins in the U.S and wrld ecnmies, and any fluctuatins in farm asset values that may ccur due t changing demand fr agricultural assets. 3

4 Percent 3 Farm Sectr Debt Ratis, Debt-t-equity rati Debt-t-asset rati Nte: Data fr 213 are prjectins. Surce: USDA, Ecnmic Research Service, Farm Incme and Wealth Statistics Data as f Nvember 26, 213 Partial-year data and USDA frecasts pint t slid gains in the value f U.S. agricultural prductin in 213. The value f crp, livestck, dairy, and pultry prductin are all expected t experience slid gains in 213 as U.S. farm peratins rebund frm the 212 drught. Increases in the value f crn fr grain, hay, sybeans, pultry, eggs, and milk are leading the verall increase in prductin values. Crps particularly benefited frm large prductin increases that, under histrical marketing patterns, will likely g int strage fr sale in 214. U.S. Value f Prductin fr Selected Crps, Billins f $ F Crn Sybeans Cttn Fruits & Vegetables Wheat F= Frecast Nuts & melns Surce: USDA, Ecnmic Research Service, Farm Incme and Wealth Statistics 4

5 The value f livestck, dairy, and pultry receipts is expected t increase in 213, reflecting especially large gains in brilers, milk, and hgs. Gains in briler receipts reflect higher expected prices and increases in bth dmestic use and exprts. Higher frecast milk receipts reflect an expected increase in prductin sld at cnsiderably higher average prices. Higher frecast hg receipts reflect a predicted increase in dmestic and exprt hg sales at a higher annual average price. Chicken egg receipts are expected t be up 8.8 percent in 213 while turkey receipts are expected t decline 8.1 percent relative t U.S. Value f Prductin fr Selected Livestck, Billins f $ 8 Cattle and calves Dairy Brilers Hgs F = Frecast Surce: USDA, Ecnmic Research Service, Farm Incme and Wealth Statistics Data as f Nvember 26, F The Farm Bill prvides assistance t farmers and ranchers, and specialty crp prducers, when they need it mst thrugh imprved access t crp insurance prgrams. Crp insurance is a critical risk mitigatin tl fr prducers, particularly thse facing drught. The new Farm Bill prvides ver $2 millin t allw better crp insurance cverage fr beginning farmers and ranchers by reducing their premiums during their first five years f farming. The Farm Bill als directs RMA t develp whle farm insurance prducts, which can help specialty crp grwers better btain insurance fr their diverse peratins. TRADE American agriculture set a new recrd fr exprts in Calendar Year 213, with a level f $144.1 billin. The agriculture sectr and farm exprts have been ne f the brightest pints fr the U.S. ecnmy. U.S. agricultural exprts have ut-paced U.S. agricultural imprts since 196, generating a surplus in U.S. agricultural trade. In 212 agricultural exprts supprted nearly 1 millin American jbs. 5

6 U.S. Agricultural Exprts, Billins f 213 $ Surce: USDA Ecnmic Research Service, Outlk fr U.S. Agrictural Trade; U.S. Department f Cmmerce, deflated using chained price index. The perid stands as the strngest five-year perid fr agricultural exprts in ur natin's histry with a ttal exprt value f mre than $657 billin. Cmpared t the previus five-year perid frm 24-28, U.S. agricultural exprts frm increased by a ttal f mre than $25 billin in real terms. The value f bulk cmmdities exprted has trended upwards at a 1 percent grwth rate per year since 25. Prvisins in the new Farm Bill bst trade while cntinuing cmmitments t develping markets at hme and abrad will be key t maintaining strng farm incmes ver the next 5 years. The Farm Bill authrized USDA s effrts t bst trade, which are estimated t generate a return f $35 in ecnmic benefits fr every ne dllar invested. These prgrams help apprximately 7 U.S. agricultural prducer rganizatins, each representing hundreds r thusands f prducers, expand cmmercial exprt markets fr their gds abrad. The Farm Bill als facilitates exprt financing f U.S. agricultural exprts. This helped generate sales f mre than $4.1 billin f U.S. agricultural exprts in 212 including high-valued prducts like prt, frest prducts, almnds, fish and fresh fruit. INVESTMENTS IN RURAL COMMUNITIES AND CREATING NEW MARKETS The U.S. has reached histric levels f investment in rural cmmunities and infrastructure. The Obama Administratin s effrts have Extended new r imprved bradband service fr mre than 7 millin Americans and 364, rural businesses. 6

7 Imprved r cnstructed mre than 9, miles f electric line; invested in 6,7 water and wastewater prjects fr nearly 2 millin Americans, creating r saving mre than 15, jbs. Carried ut mre than 8, cmmunity facilities prjects reaching nearly 31 millin rural Americans. Helped mre than 627, rural families t buy, refinance r repair a hme. Prvided grants and lans t assist nearly 6, rural small and mid-sized businesses in creating r saving mre than 3, jbs. The imprtance f the Farm Bill ges well beynd the rle f agriculture. The Farm Bill authrizes and directs the wrk f USDA-Rural Develpment, which prvides technical assistance and financing fr lng-term investments in the future f rural cmmunities. Amng ther frms f assistance, the Farm Bill: Cntinues thrugh 218 the authrities fr rural develpment prgrams essential fr cmmunity ecnmic develpment including prgrams that finance investments in bradband, telecmmunicatins, distance learning and telemedicine, entrepreneurship, and business develpment and grwth. Cntinues an emphasis n small business develpment, jb creatin, and grwth. Advances grwth f lcal and reginal fd systems, including n-farm businesses. Priritizes and reserves 1% f funding in varius prgrams fr investments that are part f a lng-term ecnmic develpment strategy fr a regin, t ensure investments are strategic, fcused, and crafted with maximum input frm the lcal cmmunity. T help prducers take advantage f the multi-billin dllar marketing pprtunity arising frm increased demand fr lcally-prduced fds, USDA has made histric investments t supprt these expanding markets. Thrugh Farm Bill-authrized prgrams, USDA supprts the develpment f physical infrastructure, ften in partnership with private lenders, and prvides technical assistance r supprt t rganizatins engaged in marketing, fd safety r prductin research and training, and ther areas. Between 29 and 212, USDA supprted ver 2,6 prjects natinwide t build new market pprtunities in lcal and reginal fds. Farm Bill-authrized cnservatin, credit and risk management prgrams are supprting prducers as they venture int these new markets. Fr example, since 29, USDA has prvided assistance t create mre than 1,8 high tunnels lw-cst greenhuses that extend the grwing seasn and cnserve sil and water n farms arund the cuntry thrugh the Envirnmental Quality Incentives Prgram f the Natural Resurces Cnservatin Service. A lnger grwing seasn allws farmers t prvide their cmmunities with fresh, lcal fd later int the year. 7

8 Increasing the number f farmers markets acrss the cuntry. Thrugh supprt f lcal and reginal fd systems, the Administratin has helped increase the number f farmers markets natinwide, reaching 8,144 in 213 up frm fewer than 5, in 28. INVESTING IN THE NEXT GENERATION OF FARMERS In 1982, 38 percent f farms were beginning farms and by 211, 22 percent had an peratr with 1 years r less f experience. Nw, sme f these farmers want t slw dwn r retire; but they have n ne t take ver their peratin. That challenges us t find new ways t help transitin farms t the next generatin. Distributin f Farms by Age f Principal Operatr Percent f Ttal Less than 35 years ld 35 t 55 years ld 55 t 64 years ld Surce: USDA Agricultural Resurce Management Survey (211). 65 years r lder 8

9 Farm Bill prgrams have assisted beginning family farmers and invested in services that help already existing family famers stay prsperus and stay n their land. The new Farm Bill will place additinal resurces and emphasis n beginning farmers, specialty crp prducers, such as thse wh grw fruits and vegetables. In additin, the new Farm Bill will place added emphasis n recruitment and supprt f U.S. veterans t begin successful farming and ranching peratins. These prgrams have prvided farm perating and wnership lans t help ver 35, small and medium sized businesses. USDA s Beginning Farmer and Rancher Develpment Prgram has prvided training and assistance t ver 4, yung and beginning farmers in 48 states. Thrugh 212, the Cnservatin Reserve Prgram, the Transitin Incentive Prgram has prvided mre than 1,7 cntracts which encurage exiting CRP enrllees t rent r sell their land t beginning farmers. These cntracts allwed beginning farmers t farm ver 275, acres f farm r ranch land in 26 states. Helping veterans. The Farm Bill being signed tday prvides additinal preference and pririty fr U.S. veterans seeking assistance under USDA prgrams. 9