109 



Energy prices will be a large factor in the higher 

 input costs, affecting fertilizer and pesticide costs. 

 Crude oil import prices could increase by as much as 6.6 

 percent, with diesel fuel costs rising about 5 percent. 



For 1993, seed use is expected to increase by 1 to 2 

 percent, while prices advance up to 1 percent. 



U.S. fertilizer prices declined sharply in 1992 but 

 will increase slightly in 1993 as a result of the surge in 

 natural gas prices. Pesticide prices will probably rise 

 between 4 and 6 percent in 1993. However, pesticide use 

 may decrease 3 percent from 1992 rates. 



Demand for farm equipment will probably gain in 1993. 

 It is anticipated that there will be a price increase in 

 equipment in the range of 3 to 5 percent. 



High crop production in wheat and feed grains in 1992 

 will mean that there will be large carryover stocks which 

 will keep prices low. This will affect the livestock and 

 dairy industries. 



The December "Agricultural Income and Finance 

 Situation and Outlook Report" of USDA's Economic Research 

 Service said that pork prices will likely to be $1 to $2 

 lower per cwt in 1993. ERS also expected milk production 

 to rise, resulting in a nearly $1 per cwt drop in milk 

 prices . 



PAST AND PRESENT SITUATION 



The charts in figure 1 show a snapshot of what has 

 been happening in the farm sector since 1988. Note that 

 even though net cash income is rising, the real net cash 

 income is declining. Net income is snowing a decline in 

 both the net farm income and the real net farm income. 



Farm assets for both real estate and non-real estate 

 are remaining somewhat constant. Farm debt is showing a 

 mild rise in the real estate sector and a somewhat higher 

 increase in the non-real estate or short-term debt. 



As a result of the record high commodity production, 

 we will see an increase in government payments for the 

 1992-93 crop year. Estimates made since this chart was 

 produced indicate these payments could exceed $17 billion. 



This chart which shows an increase in government 

 spending is very alarming, given the nation's present 

 budget situation. Farm programs have long been the 

 entitlement that is most likely to be cut to achieve 

 budget savings. Figure 2 indicates how farm spending has 

 fared . 



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