Economic and Marketing Information
FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
September 30,  1970
1971 Outlook
Net income to Indiana agriculture
is likely to be down 2 to 5 per cent for
the year beginning October 1, 1970,
compared to the past 12 months. However, it should be recognized that the
past year has been a favorable one for
most Indiana farmers. Thus, net earnings in the year ahead are expected to
be below only the most favorable years
of 1965, 1969 and 1970.
With a likely continued decrease in
in Indiana farm numbers of about 3
per cent per year, average net earnings
per farm in the year ahead are expected to closely approximate the net
earnings of the past 12 months. However, purchasing power per farm may
be down 4 to 5 per cent because of
continued inflation.
For individual farmers, net earnings
will be greatly influenced by their type
of farming and their corn losses caused
by leaf blight. Earnings will be sharply
lower for most hog producers, laying
flock operators, and farmers badly hit
by the blight. On the other hand, earnings on dairy farms will likely be about
the same to down slightly, and on beef
cattle farms up slightly. Crop farmers
who experienced little or no damage
from the blight will likely have substantially improved incomes.
General Business
The relatively slack pace of the
economy shows few signs of changing
over   the   next   few   months.   Some
strengthening is probable by the mid-
F die of 1971.
The rate of inflation may gradually
subside as the months go by but is
expected to average 4 to 5 per cent
for the year. This compares with
slightly over 5 per cent for the past
year. Real output is expected to be up
1 to 2 per cent; whereas real output
changed very little during the past
year.
A continued sluggish general economy and persistent inflationary pressures will reflect themselves to farmers
in their dual roles as producers and as
consumers in the following ways:
1. The demand for farm products
will likely continue to rise in response
to increasing income per person and
population growth. Also, foreign demand is expected to continue strong,
and exports of U.S. farm products in
the year ahead may be near the favorable levels of 1969-70.
2. The composite cost of production items used in farming will likely
edge higher. However, feeder pig
prices will be sharply lower and interest rates are expected to ease a bit. On
the other hand, feed grain prices and
the price of most desired hybrid seed
corn will likely be sharply higher. Real
estate and personal property taxes and
farm wage rates are expected to increase substantially. Most other items
are expected to increase slightly.
3. With little growth expected in
the general economy, unemployment
will be a nagging problem and may
increase somewhat during the next few
months. Opportunities for agricultural
people to find jobs off the farm are
expected to vary considerably among
areas of the State and among workers
with different skills and qualifications.
Even with some unemployment in the
general economy, good hired farm labor will continue scarce.
4. Inflation will continue to erode
the purchasing power of farmers and
all consumers in the months ahead.
Looking into the future, continued inflation seems much more likely than
stable or declining prices. Whether or
not we are able to reduce the rate of
inflation to more acceptable levels (1
to 3 per cent per year) will depend
upon: (a) the world situation and
whether we are able to reduce and
then keep defense expenditures at considerably lower levels (measured as a
per cent of gross national product)
than has been true the past several
years; (b) our willingness, over a
fairly prolonged period, to undergo the
disciplines of a tight money supply,
high interest rates, high taxes, a near
balanced budget, and some unemployment (and in the short run some slowdown in the growth of our economy).
This is indeed a bitter pill to Americans generally, and to those in the
political arena in particular. On the
other hand, a continued rate of inflation comparable to that of the past 3
years poses serious problems for our
economy and for many people individually.
5. With continued tight money
supply and relatively high interest
rates; it will be extremely important
for farmers to make good use of credit.
First and foremost this means developing and maintaining a good credit
rating. It means planning for credit
needs well in advance. It will likely
mean more and better records and
more budgeting so that worthy farmers
can  convince  themselves  as  well  as