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Current Economic and Financial Conditions Board of Governors of the Federal Reserve System August 4, 1965 Farm income. Rising prices received for meat animals in April, May, and June raised farm income prospects for 1965* Realized net: income for the second quarter was estimated at a seasonally adjusted annual rate of $15.0 billion, up $2.4 billion from the first quarter anc $2.0 billion from the second quarter a year ago. receipts outpaced that in production expenses. The increase in gross With prospects for con tinued strength in meat animal prices and for relatively stable crop prices and a harvest larger than in 1964, realized net farm income in 1S65 may turn out to be the highest since the $13.7 billion of 1953. In the last 4 years realised net income has ranged from $12.5 to $12.9 billion. In the second quarter, increases in cash receipts and govern ment payments both contributed to a 7 per cent gain in gross realised income over a year earlier. Gains in cash receipts from sales of live stock and products reflected higher prices. Meat animal prices were a fifth above the low second quarter prices of 1964 while meat production was 6 per cent less. Dairy and poultry product prices were moderately higher even though marketings were also a little higher. For crops, prices in the second quarter were about equal to a year ago and volume of marketings was 6 per cent larger* Larger government payments re flected increased participation in the feed grain and cotton acreage retirement programs and an increase in the proportion of the price support on wheat that is made through payments. Production expenses in the second quarter were somewhat higher than a year earlier. Feed prices were up a little and purchased live stock prices were sharply higher than a year ago.. trend in overhead costs continued. The long-run up Livestock situation. Cattle feeding rurned up in May and Ju: in response to the profitable feeding margins this unprofitable years. year following two Placements of cattle on feed during the second qua-: a fourth larger than a year earlier brought the inventory of cattle on feed to 7.5 million h e a d , 9 per cent more than in mid-1964. Production of fed beef is expected to stay above year-earlier levels through out the remainder of 1965. Prices are also likely to be well above year- earlier levels reflecting income g a i n s , population growth, and smallei pork supplies. All evidence points to a continuation this fall of the decline in hog production underway since the spring of 1964. The combined spring and fall pig crops of 1965 are indicated to be 9 per cent below 1964 and 15 per cent below 1963. Pork production during the remainder of 1965 will probably be 10 per cent below year-earlier levels. Hog prices are expected to decline seasonally this fall but only to levels well above those of last fall. If producers respond to favorable price ratios as in the past, expansion in hog production may begin in 1966. Broiler production has increased sharply in recent w e e k s . The very large expansion has prompted the Department of Agriculture to warn this industry against overexpansion. Expansion in cattle feeding may be the major cause of a recent acceleration in short-term debt of farmers, following a year and a half of slackening rate of expansion. Outstanding loans of PCA*s for the country have shoxm a more rapid rate of increase since March; in the Corn Belt acceleration began earlier and was larger.
@FedFRASER