An Assessment of Farm Income, Debt Repayment Capacity, and Size Distribution of Farms Briefing for the Conservation Technology Information Center Board of Directors Washington, D.C. October 27, 1999 James Johnson & Mitchell Morehart Resource Economics Division, ERS, USDA

Presentation Outline Farm Income Farm Debt & Repayment Capacity Size Distribution of Farms Occupation, Off-Farm Work & Typology of Farms

Corn Wheat Soybeans Low commodity prices have increased concern for the financial heath of agriculture and viability of family farms.

$111.1 Crop cash receipts cash receipts for corn, soybeans, and wheat are expected to be more than 25 percent below 1997 levels $102.2 $95.7 $106.2 $ $Billion

$96.5 Livestock cash receipts cash receipts for hogs are expected to be about 32 percent below 1997 $94.5 $96.0 $93.0 $ $Billion

Commodity price trends are not indicative of farm income

Historical High ($16.7 billion, 1987) $7.4$7.5 $12.2 Emergency assistance puts calendar year 1999 direct government payments at new high $

Nominal Real (1992$) ( Average) 1999 net farm income rebounds to near 1997 level $48.0

Northern Crescent 2% Heartland -1 % Mississippi Portal 3 % Projected change in average farm business net cash income, Northern Great Plains 19% Prairie Gateway 17% Basin and Range 7 % Southern Seaboard -10 % Eastern Uplands -3 % Fruitful Rim 0 %

Equity Debt Assets Equity growth to continue in 1999 with most rise in asset values and small decline in farm debt

Source: USDA/ERS Year-to-year changes in farm debt, f Percent

Fewer farm businesses are expected to experience debt repayment problems in 1999 Percent of farms with DRCU of 2.4 or higher

Distribution of farm businesses by overall financial performance,