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Historic, Archive Document Do not assume content reflects current scientific knowledge, policies, or practices. United States Economic Indicators of the Department of Agriculture Farm Sector Economic Research Service State Financial ECIFS 11-2 Summary, 1991 aHD1769 . E25 ««***«««« I assisiiiistl It’s Easy To Subscribe! Just dial 1-800-999-6779. Toll free in the United States and Canada. Other areas, please call 1-703-834-0125. Ask for Economic Indicators of the Farm Sector series. This series is available by subscription. Four separate reports are published each year: National Financial Summary State Financial Summary Costs of Production Production and Efficiency Statistics Subscription rates are $19. Multiyear subscriptions are available for 2 years at $36 and for 3 years at $53. Single copies are $9.00 each. For non-U.S. addresses (in¬ cluding Canada), add 25 percent. Charge your purchase to your VISA or Master- Card. Or send a check or purchase order (made payable to ERS-NASS) to: ERS-NASS 341 Victory Drive Herndon, VA 22070 Can You Use an Electronic Database? An electronic database containing the data in this report is available. This database is in the form of Lotus 1-2-3 WK1 worksheet files on DOS-compatible diskettes. To order, just dial 1-800-999-6779. Toll free in the United States and Canada. Other areas, please call 1-703-834-0125. Ask for the State Financial Summary database (order #89012A, 5.25" disks, $105, or order #88012B, 3.5" disks, $35). For non-U.S. addresses (including Canada), add 25 percent. Charge your purchase to your VISA or MasterCard. For further information on this database, write to Cheryl Johnson, room 936D, 1301 New York Ave., NW., Washington, DC 20005-4788 or call 1-202-219-0804. Economic Indicators of the Farm Sector: State Financial Summary, 1991. Agriculture and Rural Economy Division, Economic Research Service, U.S. Department of Agriculture. ECIFS 11-2. Abstract California led in net farm income for 1991 with $5.6 billion. Texas was second with $3.1 billion, followed by Florida ($2.7 billion), Iowa ($2.3 billion), and North Carolina ($2.1 billion). Net farm income reflects cash income minus cash expenses plus adjustments for noncash and operator dwelling income and expenses. Cattle and calves and dairy products were the top commodities in cash receipts. Texas led cattle and calf receipts with $6.2 billion, and Wisconsin topped dairy sales with $2.9 billion. Corn and soybeans were the third- and fifth-ranked commodities, and Illinois led in sales for both, with receipts of $2.7 billion and $2 billion, respectively. Hogs ranked fourth, and Iowa was the leader with receipts of $2.9 billion. Excluding operator households, California, Texas, and Iowa are the top three States, whether ranked by assets, total debt, real estate debt, or nonreal estate debt. Texas ranked first in farm assets ($73.2 billion), California second ($70.1 billion), and Iowa third ($51.3 billion). California ranked first in total debt ($13.1 billion), followed by Iowa ($9.8 billion) and Texas ($9.7 billion). Keywords: Net farm income, returns to operators, farm assets, and farm debt. Acknowledgments This publication benefited from the critiques of Gerald Schluter, Donald Bellamy, and Bill McBride. Washington, DC 20005-4788 March 1993 Preface This report is one of four segments in the Economic Indicators of the Farm Sector series. Other reports in the series are National Financial Summary, Production and Efficiency Statistics, and Costs of Production. This report corresponds to the national farm income and balance sheet accounts published in Economic Indicators of the Farm Sector: National Financial Summary, 1991, disaggregated to State levels. One major feature of these reports is the separation of the operator’s farm dwelling and household from farm production transactions, assets, and debt. All the income and balance sheet estimates in these reports are based on the calendar year. The data are based on information mainly from the U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) and the 1987 Census of Agriculture: United States (Vol. 1, Part 51, Nov. 1989). Additional information is obtained from other Government agencies and, in some cases, from private sources. Revisions were made for 1982-90. State-level farm income and balance sheet estimates for 1991 are published for the first time. Additional information about cash receipts by State and commodity can be found in the annual report, Ranking of States and Commodities by Cash Receipts, published annually by ERS, USDA. Cash receipts, the most variable of the major components of farm income, are often used as an indication of conditions in the farm economy prior to the availability of an estimate of net farm income. Estimates of cash receipts are available monthly. For further information, contact Linda Farmer on (202) 219- 0804. This publication was prepared by the staff of the Farm Income Estimation Section and the Farm Financial Analysis Section, Farm Sector Financial Analysis Branch, Agriculture and Rural Economy Division, Economic Research Service. Principal contributors and information sources: Branch chief: Jim Johnson . (202) 219-0800 Farm income: Roger Strickland . 219-0804 Cash receipts-Bob Williams, Billie Whittington, Cheryl Johnson .i. 219-0804 Government payments, CCC loans-Pat Vines . 219-0804 Production expenses-Christopher McGath . 219-0804 Farm-related income—Linda Farmer . 219-0804 Balance sheet: Duane Hacklander. 219-0798 Assets-Ken Erickson, Charles Barnard . 219-0799 Debt-Jim Ryan. 219-0798 Returns to equity—Ken Erickson . 219-0799 Farm financial ratios-Ken Erickson . 219-0799 Support group: Computer-Helen Devlin, Janusz Kubica Secretarial-LaShawn Parker, Sandra Gurick Statistical assistance-Flossie Dingle, Connie Dixon Computer assistance-Jackie Ross Managing editor: Jim Carlin.219-0512 Publication coordinator: Cheryl Johnson. 219-0804 u Contents Page Highlights . iv List of Tables. vi Background. 1 State Income Accounts . 1 Comparisons with Tax Data . 1 Data Sources and Estimation Methods . 2 Net Farm Income. 2 Returns to Operators . 4 Net Cash Income . 4 Net Business Income . 5 State Balance Sheet Accounts . 5 Real Estate Assets . 6 Nonreal Estate Assets. 7 Financial Assets . 8 Debt. 8 Reiil Estate Debt . 8 Nonreal Estate Debt. 10 Nominal and Real Capital Gains. 10 Farm Financial Ratios . 11 Statistical Tables State Farm Income Statistics. 14 State Farm Balance Sheet Statistics. 174 Farm Financial Ratios . 245 iii Highlights Net farm income was $44.6 billion in 1991, down from $50.9 billion in 1990. Gross farm income dropped 3.3 percent ($6.5 billion), and production expenses declined by 0.1 percent ($188 million). Cash receipts from farm marketings were down $2.6 billion, with a $3.2-billion drop in livestock receipts offsetting a $548-million increase in crop receipts. Crop growers reduced output in 1991, and generally sold at prices below those in 1989 and early 1990. Crop producers also received $1.1 billion less in direct Government payments. The drop in overall value of commodities triggered the decline in net earnings. Cash receipts from sales of livestock and products were down $3.2 billion, due largely to a $2.1-billion decline in sales of dairy products. Milk prices, which had declined in 1990, remained down in the first half of 1991 before turning up in the second half. The reversal of the decline in milk prices was a result of farmers’ cutting back their dairy herds, which limited the production of milk. The $3- billion dropoff in additions to inventories, as compared with 1990, was mostly a reflection of lower production of corn and wheat. , The farm sector balance sheet, excluding operator households, stabilized in 1991. The value of farm assets declined $4.7 billion during 1991, the first decline since 1986. Farm debt rose for the first time since 1984 to $139 billion. The fall in farm asset value and the increase in farm debt resulted in a farm equity level of $703 billion. The rates of return on assets and equity from current income were strong in 1991 at 4 and 3 percent. Cash receipts were $167.3 billion, down from $169.9 billion in 1990. California led the Nation with $17.9 billion in cash receipts from all commodities. California’s five top commodities in sales-dairy products, greenhouse and nursery products, cattle, grapes, and cotton-accounted for 47.6 percent of the State’s cash receipts. California led in crop sales, $12.6 billion, and was the top producer of greenhouse and nursery products, eggs, hay, tomatoes, grapes, and lettuce. The State ranked fourth in livestock commodity receipts, $5.3 billion. Texas ranked second in cash receipts, with $12.1 billion in sides, first in livestock ($7.9 billion), and fifth in crops ($4.2 billion). Texas was the leading producer of cattle and calves, cotton, and grain sorghum. Iowa ranked third in cash receipts, with $10.2 billion, and had the third highest livestock sales and the fourth highest crop sales. Nebraska ranked fourth, with $8.8 billion in total sales, while Illinois ranked fifth, at $7.5 billion. Iowa was the leading producer of hogs, and Illinois grew the most corn and soybeans. As in 1990, California, Texas, Iowa, Nebraska, and Illinois ranked as the top States in cash receipts for all commodities. These rankings reflect the size of the State, the proportion of its land that can be cultivated, the fertility of the land, and the State’s comparative advantage in producing and marketing high-valued commodities. Net farm income was $44.6 billion, down from $50.9 billion in 1990. The five leading States in net farm income were California ($5.6 billion), Texas ($3.1 billion), Florida ($2.7 billion), Iowa ($2.3 billion), and North Carolina ($2.1 billion). Production expenses, including those incurred with operators’ dwellings, at $144.9 billion, about matched 1990’s level. The leading States in production expenses were California ($13.3 billion), Texas ($11.1 billion), Iowa ($9 billion), Nebraska ($7.8 billion), and Illinois ($7 billion). The only difference in the composition and the ranking of the group from a year earlier was that Kansas had edged out Illinois by $102 million. IV Returns to operators fell by $6.3 billion to $43.2 billion. California led all States in returns to operators, at $5.5 billion, followed by Texas ($2.9 billion), Florida ($2.7 billion), Iowa ($2.3 billion), and North Carolina ($2.1 billion). Florida and North Carolina were the only two of the top States to increase returns to operators in 1991. Nonfactor payments rose to $107.8 billion from $106.5 billion, but the change was offset by a decline in factor payments to $33.5 billion from $34.9 billion. Net cash income from farming was $58 billion, down from $61.3 billion in 1990. Net cash income from farming was highest in California ($6.4 billion), followed by Texas ($3.8 billion), Iowa ($3.4 billion), Florida ($2.9 billion), and Minnesota ($2.6 billion). Net business income was $42.3 billion, a drop of 3.2 percent from 1990’s $45.5 billion. California led all States with $5.6 billion, followed by Texas ($2.7 billion), Florida ($2.7 billion), Iowa ($2.4 billion), and Nebraska ($1.9 billion). In 1990, the top five States were California, Texas, Iowa, Florida, and North Carolina. Changes in net business income approximate changes in net cash income in periods when capital consumption is stable. Capital consumption in 1991 was virtually unchanged from 1990. The value of farm assets (excluding operator households) fell to $841.8 billion as of December 31, 1991, off 0.6 percent from the previous year. Real estate values strongly affected total farm assets (excluding operator households) because the value of farm real estate accounted for 74 percent of total farm asset value in 1991. The States with the highest farm asset values (excluding operator households) were Texas, at $73.2 billion, California ($70.1 billion), Iowa ($51.3 billion), Illinois ($50.2 billion), and Nebraska ($35.1 billion). Farm debt (excluding operator households) was $138.8 billion, a 1.5-percent increase from the year before. Real estate debt rose 1 percent, while nonreal estate debt increased 1.9 percent. California was the leading State in total debt (excluding operator households), at $13.1 billion, down from $13.2 billion in 1990. Iowa was second at $9.8 billion, up from $9.5 billion. Texas ranked third, at $9.7 billion, up from $9.6 billion in 1990; Illinois was fourth at $7 billion, unchanged from 1990; and Nebraska followed with $6.6 billion, up from $6.3 billion. Equity (excluding household assets) fell $6.7 billion to $703.1 billion. Texas registered the largest equity, at $63.5 billion, followed by California ($57.0 billion), Illinois ($43.2 billion), Iowa ($41.4 billion), Nebraska ($28.5 billion), and Minnesota ($28.5 billion). The debt-to-asset ratio provides insight into the collateral security of loans (a security pledged against the performance of a contract), the relative indebtedness of the farm business, and the risk borne by lenders. The farm sector debt-to-asset ratio (excluding operator households) had risen to 16.5 percent from 16.2 percent by the end of 1991. Delaware and Mississippi had the highest debt-to-asset ratios, at 22 percent, followed by Georgia (21.3 percent), Idaho and Arkansas (21.1 percent), Louisiana (20.5 percent), North Carolina (20.3 percent), and Wisconsin (20.2 percent). v List of Tables Table Page Section I Tables: State Farm Income Statistics 1. Summary of the farm sector’s financial status, by State, 1991 . 14 2. Leading States for cash receipts, 1991 . 15 3. States ranked by cash receipts, 1991 . 16 4. Farm income indicators, 1987-91 . 17 5. Cash receipts, by commodity groups and selected commodities, United States and States, 1987-91 . 68 6. Cash receipts from farm marketings, by State and month, 1987 . 135 7. Cash receipts from livestock and livestock products, by State and month, 1987 . 137 8. Cash receipts from crops, by State and month, 1987 . 139 9. Cash receipts from farm marketings, by State and month, 1988 . 141 10. Cash receipts from livestock and livestock products, by State and month, 1988 . 143 11. Cash receipts from crops, by State and month, 1988 . 145 12. Cash receipts from farm marketings, by State and month, 1989 . 147 13. Cash receipts from livestock and livestock products, by State and month, 1989 ... 149 14. Cash receipts from crops, by State and month, 1989 . 151 15. Cash receipts from farm marketings, by State and month, 1990 . 153 16. Cash receipts, from livestock and livestock products, by State and month, 1990 . 155 17. Cash receipts from crops, by State and month, 1990 . 157 18. Cash receipts from farm marketings, by State and month, 1991 . 159 19. Cash receipts from livestock and livestock products, by State and month, 1991 . 161 20. Cash receipts from crops, by State and month, 1991. 163 21. Value of home agricultural commodity consumption, by State, 1989-91 . 165 22. Commodity Credit Corporation loan placements, by State, 1987-91 .... 166 23. Commodity Credit Corporation loan redemptions, by State, 1987-91 . . . 167 24. Commodity Credit Corporation loans liquidated, by State, 1987-91 .... 168 25. Government payments, by program and State, 1988 . 169 26. Government payments, by program and State, 1989 . 170 27. Government payments, by program and State, 1990 . 171 28. Government payments, by program and State, 1991. 172 29. Farm production expenses (excluding operator households), by State, 1987-91 . 173 Section II Tables: State Farm Balance Sheet Statistics 30. Farm balance sheet, United States, December 31, 1987-91 . 174 31. Farm balance sheet (excluding operator households), by State, December 31, 1987-91 . 175 32. Farm balance sheet (including operator households), by State, December 31, 1987-91 . 200 33. Real estate farm debt (including operator households), December 31, 1987 . . .. 225 34. Nonreal estate farm debt (including operator households), December 31, 1987 . 226 35. Real estate farm debt (including operator households), December 31, 1988 . 227 vi