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USDA ERS forecasts 17.2% drop in net farm income. If realized, it will be the lowest since 2009.

November 30, 2016

2 Min Read

Net cash farm income for 2016 is forecast to drop 14.6% from the 2015 estimate, according to the November 2016 Farm Income Forecast released today by USDA's Economic Research Service. This is the third straight year net cash farm income has dropped.

Net farm income is forecast to drop 17.2%, to $66.9 billion. If realized, this will be the lowest since 2009 in both real and nominal terms.

Cash receipts overall are forecast to fall $23.4 billion, 6.2%, in 2016, due to a $23.4 billion, or 12.3% drop, in animal/animal product receipts; crop receipts are essentially unchanged from 2015.

Net cash farm income projected to drop for third year in a row

Livestock returns

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Nearly all major animal species are forecast to have lower receipts, including a 14.8%, or $11.6 billion, decrease in cattle/calf receipts.

Receipts from turkey operations, however, are forecast to increase by 10.6%, or $.6 billion, and miscellaneous livestock returns are projected to increase by 2.9%, or $.2 billion.

Crop returns

A marginal expected gain in crop cash receipts is driven largely by a $5.3 billion increase in oil crop receipts, while feed crops, mainly corn, and vegetables/melons are down $2.2 billion, or 3.8%, and $1.4 billion, or 6.9%, respectively.

Cotton receipts, on the other hand, are expected to increase by $.9 billion, 17.5%.

Government payments

Direct government farm program payments are projected to rise $2.1 billion, or 19.1%, to $12.9 billion in 2016.

Averages

Average net cash farm income for crop farms is expected to improve. Net cash farm income for farms specializing in mixed grains is projected to increase 10.4%; corn, 15.1%, and soybeans and peanuts, 11.8%.

Production expenses

Total production expenses are down $9.2 billion, or 2.6%, compared to 2015. This is the second year in a row production expenses have declined.

Asset values

Farm asset values are forecast to decline by 2.1% in 2016, and farm debt is forecast to increase by 5.2%. Farm sector equity, the net measure of assets and debt, is forecast down by $79.9 billion, 3.1%. The decline reflects a .5% drop in the value of farm real estate, as well as declines in the animal and animal product inventories, financial assets and machinery and vehicles. The rise in farm debt is driven by higher real estate debt, which is up 8.6%

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