Sunday, August 30, 2009

The flaw of averages*...

The recent release of net farm income projections for 2009 have provided ample ammo for those who are anxious to reclaim a cushy position for agriculture in the Victim Line.  After all, NFI is expected to drop 38% - a pretty drastic plunge.
Net farm income is forecast to be $54.0 billion in 2009, down $33.2 billion (38 percent) from the preliminary estimate of $87.2 billion for 2008. The 2009 forecast is $9 billion below the average of $63.2 billion in net farm income earned in the previous 10 years.
Net cash income, at $68.2 billion, is forecast down $29.4 billion (30 percent) from 2008, and $3 billion below its 10-year average of $71.2 billion. Net cash income is projected to decline less than net farm income primarily because net cash income reflects the sale of $1.8 billion in carryover stocks from 2008. Net farm income reflects only the earnings from production that occurred in the current year. [More]
[How many knew the difference between NFI and NCI?  Anyone? Bueller?]

On a graph, however it looks less apocalyptic.


This is remarkably benign compared to other sector income performances during this recession.  At most it illustrates what a windfall 2008 was.

The big prob here is all farmers are piled into one bucket for measuring.  While grain guys like me are not happy with our outlook, we're sitting pretty compared to livestock and dairy.  Not all farmers need or deserve public sympathy or extra support.  Certainly not sugar.

However, our system will likely allocate at least some handouts to those same guys.

There are some folks in trouble on the farm, but the average is masking the reality.

* I'm reading an eponymous book and will report on same anon.

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