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USDA forecasts 13% increase in net farm income
Sep. 1, 2017
It's been three long years of decline, but farm revenue is now expected to rise this year, slightly, according to a forecast released by the USDA's Economic Research Service.
Both net cash income and net farm income will be stronger than they were last year, bringing revenues close to the historical average, according to ERS economists.
Net cash income for farmers is now forecast to reach $100 billion, about 13 percent more than farmers made last year, according to the report. Net farm income - similar to the cash indicator, but including money earned from selling older crop inventories - is projected at $63.4 billion, a 3 percent increase from 2016.
Much of the increase in the forecast is due to stronger cash receipts from meat, dairy, poultry and eggs, ERS said. Overall cash receipts are expected to rise by $14.1 billion (up 4 percent from 2016). The cash income includes $13.6 million more this year than producers will get for their hogs, cattle, chicken, milk and other animal products.
Cash receipts for crops are expected to remain mostly flat this year, but there will be a minor bump for soybeans, cotton and vegetables, ERS predicts.
The income bump predicted by USDA is welcome, said National Farmers Union President Roger Johnson - but the report in no way eases the pain that farmers continue to feel from mostly lower prices.
"It's good that (net farm income) is not dropping," Johnson told Agri-Pulse in an interview. "It's nice to see that it's nudging up."
But that was about the extent of the good news.
"It's still down almost 50 percent from what it was at the peak," he said, predicting that farmers will continue to suffer under massive stocks and low commodity prices.
Those hurting the worst, he said, are beginning farmers.
"They entered during a relatively high-price period," Johnson said. "They locked in costs that are at a relatively high level."
It's all the more reason that Congress needs to improve the safety net for farmers when they write the 2018 farm bill, Johnson said.
Net farm income, the measurement favored by many - including Johnson - because it's viewed as a more stable indicator and not influenced by positive or negative inventory numbers, reached an apex of about $125 billion in 2013, according to ERS statistics. That year, net cash income was about $135 billion for the nation.
In 2014 - also a year of strong farm income - the median income of farm households reached about $82,000 a year. In 2017 that median will be about $77,000, according to ERS. It's a low number, especially considering that most of that income doesn't come from farming.
"Median farm income earned by farm households in 2016 is estimated to be negative at minus $940 and forecast to dip slightly (to minus $1,325) in 2017," ERS concluded. "In recent years, slightly more than half of farm households have lost money on their farming operations each year."
ERS also forecast that total production expenses will rise by $4.6 billion (1.3 percent) this year, after declining for two straight years, led by increases in interest, hired labor and fuels. Partially offsetting these increases are expected drops in feed and fertilizer/lime expenses.
Farm asset values are forecast to increase by 4.0 percent in 2017, and farm debt is seen rising by 4.4 percent. The increase in assets reflects a 4.6-percent rise in the value of farm real estate. The rise in farm debt is driven by higher real estate debt (up 7.5 percent).
Source: Agri-Pulse
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