The latest report from the USDA Economic Research Service (ERS) says net farm income will be down 38 percent this year.
This would be the largest single-year decline since 1983 in both nominal and inflation-adjusted terms. Net cash income is forecast at $93 billion down 28 percent from 2014.
Crop receipts are projected to be $186 billion this year. That is a decrease of 8.7 percent or $18.2 billion led by an $8.6 billion decline in corn receipts, $5.7 billion drop in soybean receipts and $2.7 billion decline in wheat receipts. The changes are due mainly to lower prices.
Livestock receipts are down $25.4 billion or 12 percent to $191.3 billion for the year. The large drop in receipts comes despite an expansion in inventory. Much of the decline was in dairy and hogs. After reaching a record $49.3 billion in 2014, milk receipts are projected to drop 28.2 percent in 2015 as declining prices more than offset an increase in production. Hog receipts are expected to be 25 percent lower this year while cattle receipts are nearly 5 percent lower. Despite avian influenza, overall poultry and egg cash receipts are projected to be 2.4 percent lower.
For the first time since 2009, the cost of production is down. Total production expenses are forecast to be 2.3 percent lower with reduction in energy and feed costs more than offsetting increases in labor, interest and property taxes.
The ERS projects government payments will be around $10.8 billion for 2015 up 10.4 percent from last year. The largest source of the payments will be through the new ARC and PLC programs. Payments on corn base acres are expected to account for 80 percent of all ARC program payments. PLC payments will go mainly to long-grain rice, peanuts and canola base acres. There will also be Margin Protection Program payments to dairy farmers.
The report says after several years of steady improvement, there will be increased financial risk for farmers this year although the debt-to-asset and debt-to-equity ratios remain low by historical standards. The annual value of the U.S. agricultural sector production is expected to fall 9.2 percent to $427.7 billion for 2015.
Source: www.brownfieldagnews.com