STRONG livestock prices boosting farm income, USDA says

Saturday, May 26th 2001, 12:00 am
By: News On 6

WASHINGTON (AP) _ For farmers, it pays to be raising animals and not crops this year.

Higher prices for beef and milk are boosting some farmers' incomes, even as growers who raise corn, wheat and other crops struggle with relatively low prices and soaring energy and fertilizer bills, the government said Friday.

The Agriculture Department revised its estimate of net farm income for 2001 to $42.4 billion, up $1.1 billion from its January forecast, because of the higher livestock prices.

That would be $2.8 billion below last year's income of $45.2 billion, but the 2001 estimate does not include supplemental farm aid that Congress is expected to approve later this year.

``If this forecast holds, the value of livestock production would reach an all-time high, while the value of crop production would be down by more than $19 billion from its record high in 1996,'' said Susan Offutt, administrator of USDA's Economic Research Service.

Farm production expenses, which include the cost of fuel and fertilizer, are expected to rise $3.6 billion this year, or 1.8 percent. Fertilizer costs are up 17 percent because of higher prices for natural gas, a key component of fertilizer. Fuel expenses are up 7 percent.

Farm groups argue that many producers can't survive financially without a fourth consecutive year of special payments to supplement government programs.

Crop prices fell sharply in the 1990s because of falling exports and a series of bumper crops, both in the United States and abroad.

Congress is likely to provide $7 billion to $8 billion, said Mary Kay Thatcher, a lobbyist for the American Farm Bureau Federation.

``All the crops are still in the tank,'' she said. ``The fruit and vegetable sector is becoming very vocal.''

Last year, farmers received a record $22.9 billion in direct government payments. Subsidies would decline this year to $15.7 billion without additional action by Congress.

Sales for dairy farmers are expected to reach $24.9 billion this year, up $4.3 billion. Cattle producers are expected to make $41.8 billion, up $1 billion. Receipts for wheat, rice, soybeans, cotton, fruits and vegetables are likely to be flat or down.

Livestock producers benefit from falling prices for corn and other grains because it means they pay less for feed.

``The demand for U.S. livestock exports has been strengthening, perhaps helped by greater consumer confidence in U.S. food safety,'' USDA said in its income forecast. ``In contrast, the demand for U.S crops has been less robust due to competition and large supplies overhanging the markets.''