Iowa Public Television


Agricultural Economy Soared in 2003

posted on August 27, 2004

Hello, I'm Mark Pearson.

The government released further evidence on Friday that the economic recovery hit a rut in the spring and early summer. *Analysts say the economy grew at a modest 2.8 percent in the second quarter, slowed by an escalating trade deficit and budget shortfall.

*The government also announced this week that the number of Americans living in poverty grew by 1.3 million people last year ... *while the number of uninsured swelled by 1.4 million. It was the third straight annual increase in both categories.

Those trends typify the uncertainty of the current economic recovery, which seems far more stable in farm country. That, too, is a bit of an anomaly since typically the agricultural sector lags well behind the overall U.S. economy. But government numbers released this week indicate the farm economy soared in 2003.

Agricultural Economy Soared in 2003 According to USDA, Net Farm Income, a broad measure of the agricultural sector's profitability was a record $59 billion last year -- an increase of 59 percent from the $37 billion earned in 2002. The lofty figure also represents a 24 percent increase from the average of the previous decade.

Fueled by robust demand both domestically and abroad, the value of both crops and livestock increased concurrently in 2003. Consequently the value of farm commodities rose by more than $21 billion dollars -- or 10-percent, while input costs increased by just 3-percent.

Much of the increase in farm income is attributable to supply and demand -- and farmers realized the benefits of both in 2003. Weather conditions were favorable for much of the year for most of the U.S. And when a dry August wreaked havoc on soybeans their prices went through the roof.

Led by soybeans, the receipts from sales of major field crops was up more than $5 billion dollars last year and only tobacco suffered a decrease in value.

Corn, the number one crop in terms of receipts, saw production skyrocket to a record 10.1 billion bushels. But thanks to increased export demand and expanded ethanol production, corn prices actually increased fractionally.

By nearly any measure, 2003 was a great year in farm country. But what does 2004 have in store for commodity prices? Stay tuned for our market analysis section later in the program and find out...

Tags: agriculture economy news USDA