Government numbers out this week revealed that with the exception of wheat, U.S. farmers produced crops in record abundance in 2001.
Farmers produced 9.5-billion bushels of corn, a 4 percent decline over the year before but still the fourth largest crop on record. Thanks to a healthy LDP, the soybean crop was the biggest ever at 2.9-billion bushels, an increase of 5 percent over 2000. And cotton production jumped 17 percent to just over 20-million bales.
Barley, rye and tobacco numbers were all down, but the biggest decrease came in wheat acres. Spurred by a switch to more lucrative soybeans, farmers planted just 41 million acres of wheat this winter, the smallest acreage since 1971. Farmers in Kansas, the nation's leading wheat producer, planted the fewest wheat acres in 45 years.
With those few exceptions, the sheer volume of production for most crops does NOT bode well for commodity prices. That feeling was reinforced this week with the release of USDA's first economic forecast for 2002.
Farm earnings will drop nearly 20 percent this year without an increase in government payments to grain and cotton farmers. That according to USDA, which in its first economic forecast for the new year predicted net farm income will reach $40.6 billion in 2002. That's nearly $9 billion less than 2001 totals.
SLUG: Harvest or grain dump
Last year, farmers received more than $21 billion in government assistance, including $9.1 billion in supplemental payments. The government has doled out the emergency payments in each of the past four years following the collapse of commodity prices in 1998.
More of that money goes to farmers who raise grain, cotton and soybeans. In fact, government payments now account for 30 percent of the gross income on wheat farms ... and 20 percent of revenue for other grains and soybeans.
USDA predicts farm incomes in 2002 also will be impacted by the sluggish world economy ... and the strength of the dollar, which makes U.S. exports more expensive to overseas customers.