Study: Farm incomes to fall this year

JEFFERSON CITY, Mo. -- A study by an agriculture economics group at the University of Missouri shows that farm income will fall slightly in 2012 due to dropping crop prices.

The Food and Agricultural Policy Research Institute at the University of Missouri (FAPRI) made public its U.S. Baseline Briefing Book on agricultural and biofuel markets Monday.

The report finds that net farm income peaked in 2011 and is likely to drop minimally in 2012. The report's authors say weather during the growing season will have a lot to do with crop prices and farm income. Crop yields, especially corn, have declined over the last two years, driving the price of corn and farm incomes up.

The study shows that corn prices could run anywhere from $6 a bushel to $3.50 depending on yield and other factors

The FAPRI report says weather, fuel supply demands and world crop production may contribute to farm income volatility, but that overall, crop prices should even out or even drop slightly.

The report also finds that food price inflation spiked in 2011, but should increase less quickly this year. By 2013, FAPRI finds that food prices will rise at about the same rate of overall inflation.

Corn ethanol production growth is expected to slow in 2012. The end of the 45 cent "blenders' credit" price support will contribute to the slowdown. Ethanol production from other sources is expected to increase, although the report finds that growth in that field is not certain.

The report is produced yearly on the University of Missouri campus. It is then distributed to congressional agriculture committee chairmen and committee members. The baseline report, according to its authors, "is not a forecast of what will happen, but rather a projection of what could happen if current policies remain in place."