May 19, 2000

USDA predicts cash receipts will decline
The farm economy picture for 2000 remains clouded by the prospect of very weak farm income.

USDA forecasts that cash receipts will fall to $190 billion this year, some $2 billion below last year and $18 billion below the record set in 1997. Lower receipts and lower government payments than last year are forecast to reduce net cash income for 2000 to $49.7 billion, down nearly 20 percent from 1999 and the lowest since 1986.

Government payments have been offsetting much of the decline in cash receipts for major crops. Last year direct government payments to farmers accounted for 38 percent of the U.S. total net cash farm income. Total government payments increased from $7.5 billion in 1997 to a record $23 billion last year. In calendar 2000, government payments, without any new legislation, will likely exceed $17 billion, the second highest year ever.
Source:USDA Agricultural Outlook, April 2000; Doane’s Agricultural Report, April 21, 2000

Wood product sales remain in a slump
Fiscal Year 1999 marked the second straight year of weakness for exports of solid wood products.

Robust domestic demand kept U.S. prices up, while housing starts in Japan remained slow. Export value dipped below $6 billion to the lowest in the 1990s—off 20 percent from 1997’s $7.5 billion record high.

Canada finally overtook Japan as the United State’s top market. Sales to Japan slumped another 4 percent, adding up to a 50 percent drop since 1996. Exports to Canada continued to grow, gaining 5 percent to a record $1.6 billion, with strong demand for U.S. hardwoods (often for export back to the United States as furniture). Sales to the European Union were off 11 percent, but sales were up 10 percent to Mexico and 38 percent to South Korea.

Be careful of IRS rules when paying in commodity
The Internal Revenue Service allows farm operators to pay their employees in commodity. The advantage to the employer and employee is that medicare taxes and social security are not paid on any wages paid in commodity.

The IRS pays particular attention to wages paid in this manner, as they have certain requirements both employer and employee must meet.
Source: AgExecutive’s Farm and Ranch, March 2000

Texas truck sales outpace auto sales
Texans for the first time in 1996 bought more trucks (611,500) than cars (582,500). By 1999, truck sales (756,900) outpaced auto sales (591,000) by 28 percent. Truck sales for the decade increased 82.8 percent compared to 4 percent for cars.
Source: Fiscal Notes, April 2000, Texas Comptroller of Public Accounts

Broiler demand continues increase
Broiler-type chicks hatched during 1999 totaled 8.72 billlion, a 3 percent increase from 1998. This record level continues the trend of annual increases begun in 1975.

Egg-type chicks hatched during 1999 totaled 451 million, up 3 percent from 1998.

Turkey hatcheries placed 297 million poults in the U.S. during 1999, slightly below the 1998 level.
Source: Agricultural Statistics Board, NASS, USDA Hatchery Production 1999 Summary, April, 2000