February 6, 2003

USDA projects average farm operator household income for 2003 at $65,095, a 4% increase from last year. Increases in crop and livestock receipts and government payments are causing the farm income component of total household income to recover from the year-ago low.

Current projections for 2002 suggest that average farm operator household income was less than the previous year. An increase in earnings from off-farm sources was insufficient to offset a reduction in livestock receipts and shifting government payments from 2002 to 2003.

"Net value added" is projected at $90.8 billion-up nearly 19% from 2002, about the same as 2001, and above the 1993-2002 average. Net value added is a measure of the contribution of agricultural production to national and state economies.

It is also a measure of the income earned by stakeholders (participants who contribute resources for a predetermined payment) and investors (participants who contribute resources with the expectation of receiving additional financial rewards for sharing in the risks of production).

Early expectations of higher crop prices and higher production, as well as some improvements on the livestock side, are driving most of the increase. After payments to stakeholders, the residual income is net farm income.

It represents a return to those who provide land, labor, capital, and management without any assurance of earnings. For 2003, net farm income is forecast to be $44.9 billion, up nearly 39 percent from 2002.