USDA expects net cash farm income to increase from $93.3 billion in 2016 to $96.9 billion in 2017. The gain is driven by stronger cash receipts for cattle and calves, hogs, broilers, and dairy.

Cash receipts are forecast down for most crop categories in 2017. Adjusted for inflation, net cash income is near the long-term average (1960 to 2016) for the second consecutive year.

Several economic and policy issues could affect the farm credit system. With strong production levels weighing down prices, demand is key to the strength of the crop and protein sectors. Also, changes to farm and trade policy in 2018 could affect farm sector income and the ability of farmers to manage risk.

Concerns remain about whether some farmers will have enough liquidity to cover farm expenses and to repay their loans. Current farm debt is relatively high — at four times the income for the sector, whereas the historical average for farm debt is three times the sector’s income. As interest rates increase, producers with debt are at greater risk.

Overall, the farm credit system is safe and financially sound, and system institutions are well- positioned for the risks facing agriculture. For the first nine months of 2017, the system reported favorable earnings and higher capital levels. Overall, loan growth has been lower in 2017 compared with the same period in 2016. Portfolio loan quality remains favorable although credit risk for certain agricultural sectors is likely to intensify.