This year will be another challenging year for many agricultural producers, according to a report presented to the Farm Credit Administration board on April 12, 2018.
Based on its first forecast of the 2018 farm economy, USDA projects net farm income to decline by 6.7%, with both crop and animal receipts down from last year.
Profit margins for corn and soybean producers are expected to be at or just above breakeven, with prices remaining near current levels. The outlook for most livestock sectors remains positive although less favorable than 2017. Dairy producers will likely see greater losses in the near term, with higher global production and reduced demand driving margins lower.
The current trade environment with China has introduced considerable uncertainty within many sectors of the farm economy.
Overall, the Farm Credit System is safe and financially sound, and system institutions are well-positioned for the risks facing agriculture. For 2017, the system reported favorable financial results: Loan growth was modest; earnings increased; and capital levels were strong. Portfolio loan quality remains favorable, but the challenges facing agriculture are significant, and credit risk for certain agricultural sectors is likely to intensify.
Source: Farm Credit Administration