Net farm income fell by 3 percent in 1988 to $45.7 billion while net cash income rose 4 percent to $59.9 billion. Both income concepts reflect cash income minus expenses. But, unlike net cash income, net farm income takes into account noncash items, such as the value of change in inventories. In 1988, the selling of crop inventories at high market prices (triggered by severe drought in some farm States) raised net cash income. This and higher feed costs reduced net farm income because a drawdown in inventory reduced the size of crop stocks.
