Rabobank’s U.S. Farm & Ranch Survey finds year-over-year income for U.S. farmers and ranchers has improved significantly over the previous two years.
"What's happening on U.S. farms and ranches mirrors the global economy – we're beginning to see improvement," says John Ryan, president and CEO for Rabo AgriFinance. "That improvement translates into some encouraging – albeit patchy – signs of recovery."
The spring 2010 Rabobank U.S. Farm & Ranch Survey found U.S. producers report a 24% improvement in income since fall 2009 while about half state their income was worse when compared to last year. But, producers expect equal amounts of income improvement and income deterioration in the next 12 months.
In addition to providing a snapshot of producers' income, the semi-annual survey also looks at the ag industry's economic and financial concerns, measures rural confidence, and investigates expansion plans.
Results show the ag economy remains a concern for 94% of producers, with 34% being extremely concerned, 30% being very concerned and 32% somewhat concerned. Looking ahead, 51% of farmers expect the ag economy to deteriorate compared to improve (17%).
A key measurement of this survey is the Rural Confidence Index (RCI), which is calculated as the percentage of producers who believe the ag economy will improve in the next year less the percentage who consider it will get worse.
RCI improved by three percentage points since the fall 2009 survey, standing at -34. While no significant differences are seen between types of farm, farm sizes or regions, the survey shows considerable RCI differences within producer groups, including: beef, -19%; dairy, -14%; row crop, -46%; and mixed, -37%.
Meanwhile, the number of producers planning to purchase, rent or lease new land in the coming year is 2.5 times higher than in previous years. Additionally, slightly less than one third of farmers plan to make a new equipment purchase in the next year.
Several survey items illustrate larger farms, which enjoy economies of scale over smaller outfits, tend to be more optimistic.
In the North Central and Southern Regions, the larger farms ($1 million to greater than $3 million gross farm income) and those with more than three employees were the most optimistic about future income. Additionally, cost improvements were larger in those North Central Region farms with $1 million to greater than $3 million gross farm income, which suggests economies of scale help producers keep their costs in check.
Larger producers are the most active group in respect to land purchases, where 20% of producers plan to purchase with 11% planning to sell land. Additionally, larger producers plan to employ slightly larger numbers than lose personnel, compared to the smaller producers who were still planning to shed further labor in the coming year.
However, producers with the perceived most difficult jobs are those operating larger units and those who employ more workers.
For survey results, go to www.rabobankamerica.com/survey.