Seemed like a relevant article.



AUGUST 28, 2009.Recession Finally Hits Down on the Farm

By SCOTT KILMAN and LAUREN ETTER
The American farm, which has weathered the global recession better than most U.S. industries, is starting to succumb to the downturn.

The Agriculture Department forecast Thursday that U.S. farm profits will fall 38% this year, indicating that the slump is taking hold in rural America. Much of the sector had escaped the harsher aspects of the crisis, such as the big drop in property values plaguing city dwellers and suburbanites.

"It is safe to say that the global recession has finally shown up on the doorstep of the agriculture economy," said Michael Swanson, an agricultural economist at banking giant Wells Fargo & Co.

View Full Image

Associated Press
Oakley, Ill., farmer Mat Muirheid works in his corn field in May.
.The Agriculture Department said it expects net farm income -- a widely followed measure of profitability -- to drop to $54 billion in 2009, down $33.2 billion from last year's estimated net farm income of $87.2 billion, which was nearly a record high. The drop in farm prices is likely to lead to a slower increase in food costs for American consumers, economists say.

The slump isn't affecting all farmers equally: Many are still reaping big profits while others are having a hard year. Farmers are accustomed to seeing their incomes swing widely, due to the vagaries of such things as Mother Nature and the oil market's impact on the price of corn-derived ethanol fuel.

For instance, sugar farmers are seeing the highest global prices in 28 years, because in part to harvest problems in India. But many dairy and hog farmers are barely holding on because of low prices and shrinking foreign demand.

The sector's expected profit decline is unusually steep, coming after two boom years. According to USDA calculations, its 2009 forecast is $9 billion below the 10-year average for farm profits.

Jay Roebuck, a 52-year-old dairy farmer in Turner, Maine, said he's falling behind on bill payments even though he has laid off two workers and reduced the rations of his cows. "This is by far the worst it's ever been," said Mr. Roebuck, who estimates he's losing about $9,000 monthly.

For most Americans, the chill in the farm belt is related to one of the few positives they see in this economy: slowing inflation. Prices farmers are receiving for everything from corn and wheat to hogs are down sharply from last year. Partly as a result, economists expect the Consumer Price Index for food to rise about 3% this year, compared to 5.5% in 2008, which was the fastest annual rise in 18 years.

.Fewer than 1% of Americans are engaged directly in agriculture. Yet farmers have a big impact on the economy. They are big spenders, produce commodities that are ubiquitous in the economy, and use about half of the nation's land. According to past calculations by the USDA, agriculture and food account for about 13% of U.S. gross domestic product.