WASHINGTON, Aug. 29 (UPI) -- The extreme U.S. drought is expected to raise farm income to $122.2 billion, its highest level in nearly four decades, the Department of Agriculture said.
"It is a wild configuration," University of Nebraska-Lincoln agricultural economics Professor Bruce Johnson told the Lincoln Journal Star.
The 3.7 percent increase, to the highest level since 1973 after inflation is accounted for, was caused by surging prices for corn and other crops -- out of fears of imminent supply declines -- and by field-crop farmers' widespread use of government-backed crop insurance, which pays them for crops damaged by drought, the USDA said.
Federal forecasters sharply cut their estimates for the fall harvest this month, projecting corn growers would have their lowest-yielding crop since 1995.
"Payouts in terms of insurance premiums are going to be astronomical," Johnson told the newspaper.
But livestock and poultry producers didn't benefit financially the way arable farmers did, the USDA said.
Livestock and poultry producers struggled with rising feed costs without comparable rises in the prices they're getting for their animals, while dairy farmers faced higher operating costs and milk-price declines, the USDA said.
Many ranchers rushed to sell animals that had little forage to graze on, which created a short-term supply glut but is forecast to lead to a smaller herd in the long term.
The value of crops, driven by record-high corn and soybean prices, is expected to rise 6.7 percent to $222.1 billion this year, an all-time high.
"Commodity prices have just shot through the roof," Johnson said.
By contrast, revenue from livestock sales will decline 0.1 percent to $165.8 billion, the USDA said.
"It is important to understand and remember that thousands of farm families, particularly livestock and dairy producers, continue to struggle with drought," Agriculture Secretary Tom Vilsack said in a statement.
Tuesday's estimates will be revised in November, the agency said.