Farm income is forecast to increase over last year, helped by insurance payouts from the crop-insurance program covering losses from the disastrous drought in much of the country, but a insurance associations argue that the program is not a “bailout” that guarantees profits for farmers.
The 2012 Farm Sector Income Forecast from the United States Department of Agriculture says net farm income is forecast to be more than $122 billion this year, up close to 4 percent over last year.
The USDA, which issued its report during the last week of August, says that the increase will, in part, be helped by crop-insurance payments. The forecast also reflects market impacts of “widespread drought and high temperatures during the growing season [and] large increases in the value of this year’s crop….”
Drought conditions are putting corn and soybean yields at nine-year lows, the report says, but the factors hurting corn producers helps another segment of the farm market: wheat farmers. Wheat farmers will see prices increase by almost 13.5 percent, says the report, with the increase in demand to replace corn with wheat.