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Despite Drought, Farm Income Should Rise, Crop Insurance Helps

Despite the severe drought that has impacted much of the country’s farm belt, income on U.S. farms is expected to increase 3.7 percent this year to $122.2 billion
September 4, 2012

Despite the severe drought that has impacted much of the country’s farm belt, income on U.S. farms is expected to increase 3.7 percent this year to $122.2 billion, the highest level in nearly four decades, according to the Department of Agriculture. The expected rise in income is driven by a combination of surging prices for corn and other crops -- a result of expected declines in the supply -- and by the ubiquitous use of government-backed crop insurance, which pays farmers for crops damaged by drought. The increase comes as the country fights a widespread drought that by some measures is the worst since the 1950s, with hot, dry conditions stretching across the Midwest and Great Plains. But those factors aren’t benefitting all farmers. The USDA forecast shows livestock and poultry producers are struggling with rising feed costs without the same price rise for their animals, while dairy farms face both higher costs and a decline in milk prices.

“It is important to understand and remember that thousands of farm families, particularly livestock and dairy producers, continue to struggle with drought,” U.S. Agriculture Secretary Tom Vilsack said in a statement.

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