NSAC's Blog

Enterprise Diversity and Farm Income

December 5, 2014

The recent news from the U.S. Department of Agriculture (USDA) that farm incomes are down — and expected to recede even more after several years of high incomes linked to historically high crop price — shines a light on something that NSAC has been talking about for many years.

NSAC has long advocated for federal policies that encourage diverse farms that grow crops and raise livestock because diversity leads to more stable farm incomes. This is the case because when the price a farmer can obtain for one crop or one type of livestock is down, another may be up thus evening out the extreme ups and downs that can happen from month to month or year to year across all sectors of farming.

That statement is no less true today than at anytime in the past.

USDA’s Economic Research Service (ERS) recently estimated that crop receipts are expected to decrease by 12 percent, mostly attributed to a continuing decline in the price of corn and soybeans, the two most widely grown row crops. This while income from livestock is expected to rise 14 percent on strong prices for cattle and hogs. The projected increase in livestock receipts more than fully offsets the drop in crop receipts.

As a result of crop price declines, ERS has forecast that farm incomes will drop 21 percent in 2015. This is at least partially attributable to the fact that by the year 2000 less than 10 percent of farms had chickens, milk cows, or hogs.

A diversified farm that raises both crops and livestock can weather the current decline in commodity prices based on increased income from the livestock side of the operation.

While conventional monoculture advocates have tried their best to build a federal subsidy and crop insurance system that reduces the risk of relying only a corn and soybean to near zero, farm incomes are still going down as crop prices go down.

This is why diversity is still a good risk management policy. Today, and for as long as livestock prices stay up a diversified farm that resisted the urge to tear up pasture to chase $8 dollar corn is likely doing better than their neighbor who did not.

NSAC advocates for, and will continue to advocate for federal policies that support diverse family farms, which support a healthy environment, a fair and just food system, and strong rural communities.

Categories: Commodity, Crop Insurance & Credit Programs, Sustainable Livestock

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