Issued by Carl Zulauf and Nick Rettig, Department of Agricultural, Environmental and Development Economics, The Ohio State University
This post contrasts and compares the farm prosperity of the 1970s with the current period of farm prosperity. This post examines U.S. net cash farm income and U.S. farm real estate values during the two periods. Read the previous related post, titled "Comparing Current and 1970 Farm Prosperity: Crop Prices" by clicking on the link.
This article uses 3 variables: (1) U.S. net cash farm income, which equals cash farm income minus cash farm expenses; (2) value of U.S. farm real estate, which includes land and buildings; and (3) U.S. Gross Domestic Product (GDP) price deflator. Economists commonly use the GDP price deflator as a broad measure of price inflation in a nation's economy. The data on net cash income and farm real estate are from the U.S. Department of Agriculture, Economic Research Service while the data on GDP deflator are from the Federal Reserve Bank of St. Louis.
The two periods examined are 1973 through 1981 and 2006 through 2012. The earlier period ends with 1981 because this is the year in farm real estate began to decline, which is often taken as the end of the 1970 period of prosperity. Therefore, there are more years in the earlier period than in the current period: 9 vs. 7 years. Other alternative periods exist, but these are reasonable periods to provide an initial comparison. The income and real estate values for 2012 are estimates and are likely to be revised.