1. An Assessment of Farm Income, Debt Repayment Capacity, and Size Distribution of Farms Briefing for the Conservation Technology Information Center Board of Directors Washington, D.C. October 27, 1999 James Johnson & Mitchell Morehart Resource Economics Division, ERS, USDA

2. Presentation Outline Farm Income Farm Debt & Repayment Capacity Size Distribution of Farms Occupation, Off-Farm Work & Typology of Farms

3. Corn Wheat Soybeans Low commodity prices have increased concern for the financial heath of agriculture and viability of family farms.

4. $111.1 Crop cash receipts--1999 cash receipts for corn, soybeans, and wheat are expected to be more than 25 percent below 1997 levels $102.2 $95.7 $106.2 $101.0 46.4 44.6 39.5 41.9 34.2 59.1 61.664.7 62.761.5 $Billion

5. $96.5 Livestock cash receipts--1999 cash receipts for hogs are expected to be about 32 percent below 1997 $94.5 $96.0 $93.0 $87.1 9.0 13.1 9.4 12.6 11.8 $Billion

6. Commodity price trends are not indicative of farm income

7. Historical High ($16.7 billion, 1987) 2.1 6.6 5.1 1.8 $7.4$7.5 $12.2 Emergency assistance puts calendar year 1999 direct government payments at new high 6.1 6.0 $22.5 8.7 6.0 1.6 2.8

8. Nominal Real (1992$) (1990-98 Average) 1999 net farm income rebounds to near 1997 level $48.0

9. Northern Crescent 2% Heartland -1 % Mississippi Portal 3 % Projected change in average farm business net cash income, 1998-99 Northern Great Plains 19% Prairie Gateway 17% Basin and Range 7 % Southern Seaboard -10 % Eastern Uplands -3 % Fruitful Rim 0 %

11. Equity Debt Assets Equity growth to continue in 1999 with most rise in asset values and small decline in farm debt

12. Source: USDA/ERS Year-to-year changes in farm debt, 1970-1999f 19701974197819821986199019941998 -5 -15 -10 0 5 10 15 20 25 Percent

13. Fewer farm businesses are expected to experience debt repayment problems in 1999 Percent of farms with DRCU of 2.4 or higher

15. Distribution of farm businesses by overall financial performance, 1994-98 1994-97 1998