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Farm income projected to fall for third straight year

Net cash farm income predicted to drop 13.3% from 2015 estimate.

August 30, 2016

2 Min Read

Farm sector profitability is forecast to decline for the third straight year, according to today’s Farm Income Forecast released by the USDA Economic Research Service.

The ERS forecasts net cash farm income for 2016 at $94.1 billion, down 13.3% from the 2015 estimate. Net farm income is forecast at $71.5 billion in 2016, down 11.5%. If realized, 2016 net farm income would be the lowest since 2009.


Cash receipts are forecast to fall $25.7 billion (6.8%) in 2016, led by an $18.7-billion (9.8%) drop in animal/animal product receipts and a $7.1-billion (3.7%) decline in crop receipts. Nearly all major animal specialties—including dairy, meat animals, and poultry/eggs— are forecast to have lower receipts, as are feed crops and vegetables/melons, down $3.2 billion (5.5%) and $1.5 billion (7.5%), respectively. While overall cash receipts are declining, receipts for several commodities are expected to increase by at least 1% above 2015 estimates, including cotton, up $0.6 billion (12.5%). Direct government farm program payments are projected to rise $2.7 billion (24.8%) to $13.5 billion in 2016, in part due to the expected price environment

For the second year in a row production expenses are down. Total production expenses are forecast down $10.1 billion (2.8%) over 2015, led by declines in farm-origin inputs (feed, livestock/poultry, seed) and fuel/oils.

Farm asset values are forecast to decline by 2.2% in 2016, and farm debt is forecast to decrease by 0.8%. Farm sector equity, the net measure of assets and debt, is forecast down by $61.2 billion (2.4%) in 2016. The decline in assets reflects a 1.5-percent drop in the value of farm real estate, as well as declines in animal/animal product inventories, financial assets, and machinery/vehicles. The decline in farm debt is driven by lower nonreal estate debt (down 4.6%), reflecting a change in farmers’ management decisions (such as reducing input expenditures) but also an increase in short-term commercial bank loan rates, which make debt more expensive.

Farm income projected to fall for third straight year

Source: USDA ERS

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