AGRICULTURAL INCOME AND FINANCE--SUMMARY                        June 26, 1996
             Approved by the World Agricultural Outlook Board
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This SUMMARY is published by the Economic Research Service, U.S. Department of
Agriculture, Washington, DC 20005-4788.  The complete text of AGRICULTURAL
INCOME AND FINANCE is available 2-3 working days following release of this
summary.
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Strong Crop Receipts Will Boost 1996 Farm Income
 
Net farm income is forecast at $45-$55 billion for 1996, compared with the $35
billion forecast for 1995.  Potential record receipts for corn, soybeans, and
wheat should boost 1996 farm sector income despite generally higher expenses. 
Although 1995 crop receipts were record high, decreased livestock receipts and
higher expenses for feed, labor, and other inputs made 1995 net farm income the
lowest of the 1990's.
 
Corn receipts in 1996 could surpass the record $17 billion forecast for 1995. 
As a result, corn will have the largest positive influence of any
commodity--crop or livestock--on 1996 farm income.  In contrast, 1996 cattle
and calf receipts could fall for the third consecutive year to below the $34
billion forecast for 1995. Because of the decline, cattle and calf receipts
could have the largest negative influence of any commodity on 1996 farm sector
income.
 
Under the Federal Agriculture Improvement and Reform ACT (FAIR) signed in
April, government payments in 1996 are forecast at $7-$9 billion.  FAIR
specifies the amount of crop-related payments that will be divided among
participating farms for each of the 7 years it is in force.  Only those farms
that participated in the previous farm program will be eligible to participate
under the new program. 
 
Production expenses in 1996 could surpass the $172 billion forecast for 1995. 
Feed expenses will increase due to higher prices for corn and soybean meal. 
High nitrogen prices will be particularly important in 1996, a year when
farmers are increasing acreage planted to corn, a heavy user of nitrogen
fertilizer.  Also, fuel prices have been around 15 percent higher in the 1996
planting season than a year earlier.
 
Farm income will decline for farms specializing in beef production, whereas
most farms specializing in crops will realize higher incomes. That's because
beef receipts are forecast to decline while feed expenses rise.  Regionally,
farms in the Northern Plains and Corn Belt are best poised to take advantage of
the higher forecast corn and soybean receipts.
 
The value of U.S. agricultural assets could increase around 2 percent in 1996. 
Most of the increase will be from rising real estate values.  Higher cash
receipts and favorable interest rates are supporting growth in farm sector
investments.  Farm debt could increase around 3 percent in 1996.  Despite
concern over reduced short-term profitability of some cattle operations,
farmers and lenders maintain confidence in the long-run profitability of
production agriculture. 
 
Printed copies of Agriculturasl Income and Finance Situation and Outlook will
be available in about a week. For further information contact Mitch Morehart at
(202) 219-0100. Text of the full report also will be available electronically. 
For details, call (202) 219-0515.  
 
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