Home Indiana Agriculture News On-Farm Profits Expected to Drop Third Year in a Row

On-Farm Profits Expected to Drop Third Year in a Row

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robert-johanssonThis year will likely see another drop in farm sector income, as government analysts expect a third straight year of declines in farm profits by the time bookkeeping is wrapped up for 2016.

“We do see net cash farm income and net farm income both coming down this year relative to 2015,” says USDA Chief economist Rob Johansson.

Net cash income at a projected $90.1 billion would be down 14.6 percent from last year, and net farm income drops over 17 percent to $66.9 billion.

“That’s down for a 2015 estimate of $80.9 billion, he said. “The majority of that decline is coming from livestock receipts.”

Livestock receipts are expected down by over 12 percent while crop receipts could climb, but only slightly. Helping producers somewhat is a projected 19 percent increase in government payments and a small decline in production expenses. But the overall result is a two percent drop in farm asset values this year.

“In addition we have seen we have seen an increase in overall farm debt,” says Johansson. That leaves a tenth of U.S. farm operations either highly or extremely leveraged.

USDA has issued a new and somewhat more upbeat forecast for this fiscal year’s agricultural exports, two months into the new fiscal year.

“We’re expected to export roughly $4 billion more than we did last year.”

Johansson says the agency has raised the forecast by a billion dollars from the August projection, up to $134 billion. He said the main reason for a better year is “increasing demand for our agricultural products in China.”

He also expects the dollar value of ag products we buy from other countries to drop around a half billion dollars. That means “our trade surplus is expected to grow about $5 billion.

Source: USDA