Farm income falls
Despite record yields in much of the Midwest, U.S. farmers are expected to make less money this year than in 2015, a new report finds.
U.S. farm income is forecast at $66.9 billion in 2016, down from $80.9 billion in 2015 and the lowest annual total since 2009, according to the Farm Sector Income Forecast issued by the U.S. Department of Agriculture's Economic Research Service.
The $66.9 billion is $4.6 billion less than the $71.5 billion forecast three months ago, when the Midwest harvest was beginning. The new forecast projects an increase in crop receipts because of the big yields, but also projects a bigger-than-expected decline in livestock receipts from three months ago. The livestock receipts decline more than offsets the crop receipts increase, said James Williamson.
Williamson, who leads the farm income and wealth statistics team at ERS, discussed the forecast with the news media in a phone conference Nov. 30.
The Economic Research Service's mission "is to anticipate trends and emerging issues in agriculture, food, the environment and rural America, and to conduct high-quality, objective economic research to inform and enhance public and private decision making."
As part of that mission, the ERS releases annual farm income statement and balance sheet estimates and forecasts in February, August and November. The new forecast, which updates its August projections, reflects yield and price changes, among other things, since then, Williamson said.
Though crop yields were exceptionally good in much of the Midwest, they were undermined by poor crop prices, Williamson said.
Cash receipts for virtually all crops are forecast to fall this year from a year ago. The most notable exception is soybeans, for which a 16-percent increase in cash receipts is forecast.
Cash receipts for most types of livestock are forecast to fall, too. Cash receipts for cattle and calves will be hit especially, falling almost 15 percent from a year ago, according to ERS.
Other highlights of the new report:
• Net cash farm income in 2016 is forecast at $90.1 billion, down from $105.5 billion in 2015 and also the lowest annual total since 2009.
• Direct government farm programs payments are forecast to rise in 2016 to $12.9 billion, $2.1 billion more than in 2016. That primarily reflects federal safety-net payments.
• Farm solvency continues to deteriorate, but remains strong compared to the 1980s.,
• Overall production expenses are forecast to drop 2.6 percent in 2016 from the previous year. Lower prices for feed and livestock/poultry purchases, as well as for fuels, seeds and rent, contributed to the decline.
This will be the second year in a row that overall production expenses have declined, which Williamson described as "fairly rare."
To read the report, visit ers.usda.gov.