Despite the worst drought in half a century, farmers are having their one of their most profitable years ever because of record-high corn prices and crop insurance payments, reports Bloomberg.
Farmer income probably will jump 6.9 percent to $144 billion, exceeding the government's August estimate of $139.3 billion, said Neil Harl, an economist at Iowa State University.
Parched fields that drove corn, soybean and wheat futures as much as 68 percent higher since mid-June mean insurance payouts may more than double to $28 billion, according to Doane Advisory Services Co., a farm and food-company researcher in St. Louis.
"Crop insurance was a savior this year," said Kyle Wendland, 29, whose corn yields plunged 36 percent and soybean output dropped 11 percent on the 1,030 acres he farms near Fredericksburg, Iowa. "It was the difference between making a profit or sustaining a loss."
Farming accounted for 0.9 percent of the U.S. economy last year, Bureau of Economic Analysis data show. Midwest farmland values rose by 13 percent to a record in the third quarter.
The government is predicting food inflation will accelerate next year, led by meat, dairy and baked goods.