Net farm income may drop by as much as $8 billion this year because of the drought, with some parts of the country feeling the pinch more than others, the Agriculture Department said this week.
The department's Economic Research Service forecast net farm income in the range of $38 billion to $43 billion, compared with the $46 billion registered last year.Analysts estimated earlier this month that net cash income for this year would be roughly equal to last year's $57.1 billion.
"Net farm income is typically much more volatile because weather often causes sharp changes in production that lead to swings in inventory value," the department said.
Crop receipts are estimated to be $6 billion above last year, with half of the increase because of drought. Livestock receipts are expected to be about the same as 1987.
"Record-high receipts going into the drought have provided a cushion against rising feed costs and deteriorating pasture conditions," it said.
Beef cattle culling has been slightly higher than normal because the five major states, Texas, Nebraska, Kansas, Colorado and Oklahoma, are outside the hardest-hit areas. Dairy cattle slaughter has been heavy in the Plains and Great Lakes areas.
Farm income is expected to vary, reflecting how severely the drought hit each region.