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USDA forecasts lower income in 2016

USDA forecasts lower income in 2016
Farmers could make less money this year, but speed of downturn begins to slow.

Updated with new chart.

USDA says 2016 net farm income will fall again, dropping for the third straight year. However, the speed of the declines are beginning to slow, and the government even raised its forecast for 2015 slightly.

USDA put 2016 income at $54.8 billion, down 3% from $56.4 billion in 2015. While the decline shows farmers tightening belts again, it’s a far cry from the large cuts in earnings seen the two previous years as profits dropped from the record $123.3 achieved in 2013.

Net farm income is projected to drop in 2016.

USDA’s Economic Research Service, which puts out the estimates, said livestock and crop revenues would both fall overall, though a few segments, including turkeys, cotton, rice, sorghum, oil crops and sugar could see gains.

As a result of the downturn farmers will rely more upon government programs, with direct payments up 31% to $13.9 billion.

Production expenses should be lower, thanks to lower fertilizer and fuel bills. However falling profits are also eating into asset values. Rising debt and falling land prices should boost the nationwide farm debt to asset ratio to 13.2%, up around a half a percent from 2015.

USDA forecasts lower income in 2016

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