Fewer than 5% of farms saw an improvement in income this year, a drastic downturn compared to the same time last year when one in four farms saw better year-over-year income, according to Rabobank’s Farm & Ranch Survey.

“U.S. farmers and ranchers continue to take a consistently conservative position when anticipating future performance, irrespective of the recent market volatility,” says John Ryan, president and CEO for Rabo AgriFinance. “They understand the cyclical nature of the industry and can adjust their risk-management strategy, purchasing decisions and output to help weather this economic downturn.”

Agricultural Economy
Concern about the U.S. agricultural economy remains with 95% of those surveyed falling within the range of somewhat concerned (34%), very concerned (30%) to extremely concerned (31%). Moving forward, more farmers expect the economy to continue to worsen (54%).

Of those surveyed, 75% believe their answers regarding their outlook would be different if the general economy was better.

Business Conditions
Regardless of acreage, U.S. producers are more distressed regarding their income. Approximately 40% believe their income will be worse next year, when compared with previous surveys. However, 27% of respondents have some optimism that their income will improve.

Additionally, higher input costs continue to be the most frequently mentioned economic challenge facing U.S. farmers. Three in five farmers rank it the primary factor that has contributed most to the economic challenge they are confronted with. Additionally there is an increasing concern regarding reduced demand (55%) and weather conditions (57%).

Risk Management
Nearly all surveyed (94%) are concerned about price fluctuations. What seems somewhat positive is that the degree of concern has lessened – those extremely concerned dropped from 62% to 48%. To manage that concern, 45% have implemented or plan on investing in risk management or marketing strategies.

Expansion Plans
Hiring plans are relatively unchanged, with three-quarters of farms still expecting hiring levels to be the same as last year. However, farmers who are concerned with the economy will reduce their employee base.

Additionally, 66% of those surveyed have no plans to purchase farm equipment. However, farms in operation 40 years or more are planning to buy equipment compared to newer farms.

In terms of land purchases, nine in 10 plan to keep farms the same size. The only change in land seems to be a slight increase in those who plan to sell land – 5% vs. 2% in the survey earlier this year.

Methodology
The study was conducted to gauge farmers’ confidence among target farming regions in the U.S. An independent survey company conducted 455 computer-assisted telephone interviews in the first half of August 2009. Farmers who owned or operated a farm grossing $250,000 or more in one of three U.S. census regions – the Midwest, Southern and Western U.S. – were targeted

Note: Regional information and further data is available at http://www.rabobankamerica.com/survey.