USDA: Farm Incomes Forecasted To Drop

Both net cash and net farm income are forecast to decline for the second consecutive year after reaching recent historic highs in 2013, according to newly-released farm sector profitability forecasts published Tuesday by the U.S. Department of Agriculture.

Net farm income is forecast to be $58.3 billion in 2015, down 36 percent from 2014’s estimate of $91.1 billion. Plentiful surpluses are flooding once tight markets, pushing prices lower.

The agency forecast a more than 9% decrease in livestock receipts, thanks largely to a decline in dairy and hog revenues amid increasing production of both milk and pork and lower prices.

Despite the sharp decline, U.S. Agriculture Secretary Tom Vilsack called the forecast “heartening”. Two-thirds of all rural counties gained jobs over the past year and the overall economy continues a record-breaking pace of 65 straight months of private-sector job growth.

Crop receipts for 2015 are expected to decrease by $12.9 billion (6.2 percent) in 2015, led by a projected $7.1-billion decline in corn receipts, $3.4 billion in soybean receipts, and $1.6 billion in wheat receipts compared to 2014. He noted the United States this year suffered its worst-ever animal disease outbreak with bird flu in poultry, and has grappled with severe drought in the West.

“I think we have a couple of tough years coming”, said Illinois farmer David Justison, 59 years old, as he hauled grain to a river terminal in St. Louis.

“An even bigger concern is for next year”.

“There’s a lot of reasons why there’s not comparability to what occurred in the 1980s”, Morehart said.

One bright spot in the Farm Belt is the USDA’s prediction that production expenses will fall this year for the first time since 2009, with decreased energy costs among the largest expected declines. Expenses are forecast to increase for labor, interest, and property taxes.

Farm asset values are forecast to decline by 3.5 percent compared to 2014, and farm debt is forecast to increase by 5.8 percent.

Mitch Morehart, a senior agricultural economist with the USDA’s Economic Research Service, told reporters economic conditions are generally strong among producers with most individuals able to make their debt payments or being careful not to take on too much debt compared to the value of their assets. Net farm income nearly doubled from 2006 through 2011.