U.S. Farm Prosperity: The New Normal or Reversion to the Mean

In 2011, farm commodity prices reached all-time highs and net returns for crop and livestock producers were expected to rise, despite surging production costs.1 In fact, USDA projected real net farm income to exceed $100 billion dollars, which is the highest inflation adjusted income since 1974.2 Since 2005, real farmland values have soared 5.6 percent per year, with more recent Federal Reserve and university land value surveys pointing to increases of 20 percent or more during 2011 (Henderson and Akers 2011; Duffy 2011). With rising land values, USDA forecasts that farmers' equity climbed to a record high of $1.8 trillion in 2011. Farmers are enjoying a boom in real farm income and wealth. Reprinted by permission of the American Agricultural Economics Association