Farm financial indicators With reduced farm income and cash flow projected over the next few years, debt management will be crucial to the financial condition of the agricultural sector. Agricultural asset values, represented mainly in farmland values, rise only moderately in the initial years of the projections, reflecting the projected near-term downturn in net farm income. In the longer run, increasing farm incomes and relatively low interest rates assist in asset accumulation and debt management. Asset values strengthen more rapidly later in the baseline in response to improving farm income prospects. Farm debt moves up less rapidly than asset values, rising an average of about 1 percent a year through 2010.
Farm equity rises significantly.
Increasing farm income and rising farm equity in the baseline lead to improvement in the financial condition of the farm sector. Retail food prices continue a long-term trend of increasing at less than the general inflation rate. Among foods purchased for preparation and consumption at home, price increases are generally strongest for the more highly processed foods such as cereals and bakery products. For these foods, prices are related more to processing and marketing costs than to farm commodity costs and, therefore, rise at a rate closer to the general inflation rate. Food expenditures Expenditures for meals away from home account for a growing share of food spending, reaching nearly 50 percent of total food expenditures by 2010.