At last--signs of an ag economy revival.

A front-page article in the June 16 Wall Street Journal says the agricultural economy may be on the verge of recovery, pointing to the end of the drought, increase in farm exports and increase in commodity prices. Although ag lenders remain cautious, the article, "After Lean Years, Farming Sector Shows Signs It May Be Reviving," says many economists are predicting farm spending will increase this fall if these factors continue.

The article points to the USDA's prediction that farm income will hit $46.2 billion, a 53 percent increase from 2002, which had the lowest net income since the mid-1980s. Farm subsidy payments for 2003 are expected to reach $21.4 billion, nearly double last year's amount. The forecasters also predict 2003 farm exports to be up about five percent over last year, to $56 billion for the crop year ending September 30.

The Wall Street Journal offers a few cautionary reminders. The price of corn may be up 15 percent over a year ago, but it is still only 60 percent of the price in 1996. Dairy prices are the lowest in 25 years. There is also increasing competition for US grain exports, particularly from South America and Russia--with South America harvesting more soybeans than the US for the first time ever--and the US's share of the world wheat market has dropped to 21.5 percent from 34 percent in 1997.