Despite the monster drought, USDA projects net farm income this calendar year will be a new record high, up seven percent from last year.
Back in February, USDA was projecting net farm income at just under 92 billion dollars. The new projection—122 billion dollars.
Why the big change?
“Crop insurance indemnities—we’re expecting big crop insurance indemnities,” says USDA chief economist Joe Glauber. “The other thing is that we have seen much higher prices than what we were forecasting back in January for the 2012 crop.”
Critics of farm programs pounced on the news of record farm income.
The Environmental Working Group says the government is propping up farmers too readily with federal crop insurance. The group calls it “compelling evidence” that what started out as a basic safety net has become a program that essentially guarantees business income.
But American Farm Bureau Federation chief economist Bob Young stresses that some farmers are faring better than others. He says those who have decent crops are okay—but notes that corn growers who expected 180 bushels and only got 20 need something to help with costs.