High Yields, Low Prices, and High Government Payments
The 2004 and 2005 crop years have set the high-water marks for national net farm income. In 2004, U.S. net farm income rose to $82.5 billion. And were it not for 2004, 2005 would have set a record for national net farm income at $71.5 billion. Even if we remove government support from the net farm income calculation, the 2004 and 2005 farm income levels are the highest ever recorded. In fact, since 2002, the U.S. agricultural economy has been on a tear, with net farm income, cash receipts, and values of production all being much stronger than we have seen historically. However, at the same time, government support to agriculture has also increased to near record levels. As Figure 1 shows, if USDA projections for 2005 hold, government support for agriculture will be $22.7 billion in 2005, which would be slightly below the record of $22.9 billion set in 2000. While the value of agricultural production has risen signifi - cantly over the last several years, the value of government farm payments has maintained a high level.