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Recession hits farmers in US
April 02, 2009 16:26 IST
According to research conducted by the US Department of Agriculture (USDA), farm income in the US may fall by as much as 33 per cent to $60 billion in 2009 as compared to $89 billion last year.
The report also suggests that US agricultural exports could fall from $117 billion to $96 billion in 2009 due to the slowing global economy and the appreciating dollar.
Besides, the economic crisis could hit employment related to US agricultural exports in the short term and lead to 45,000 job losses in 2009.
"The world economic crisis that began in 2008 has major consequences for US agriculture," according to the report prepared by the Economic Research Service of the USDA.
However, the report said that the effects of the "crisis are expected to be less severe for US agriculture than for many other sectors of the US economy".
The crisis would impact US agriculture mostly through indirect international effects rather than through changes in the US economy, it noted.
According to the report 'The 2008-09 World Economic Crisis: What it means for US Agriculture', the US net farm income in 2009 could decline by 26 per cent to $66 billion -- a level similar to the average of $65 billion earned in the previous 10 years.
In the worst case scenario, the net farm income could fall to $60 billion, a drop of 33 per cent, it added. The net farm income reflects only the earnings from production that occurred in the current year.
"The weakening of global demand because of emerging recession and declining economic growth result in reduced export demand and lower agricultural commodity prices, compared with those in 2008. These, in turn, reduce US farm income and place downward pressure on farm real estate values," the report explained.
The research study pointed out that crisis, which originated in the US, has spread to rest of the world and especially to large emerging markets, such as China, South Korea and Mexico. Besides, the downturn is strengthening the dollar against most other foreign currencies.
"The stronger dollar reduces US agricultural exports by making them more expensive in foreign markets than output by competitors," the report said.