Farm Income Below $70 Billion — A New Average for U.S. Agriculture?

The USDA forecast net farm income, a broad measure of profits, of $69.4 billion this year. If accurate, the total would be the third year of net income below $70 billion since 2015. “We’re starting to see … a new average coming out here,” said USDA economist Carrie Litkowski during a webinar on Wednesday. Farm income in 2019 will be far below the halcyon levels of early this decade, when a seven-year commodity boom propelled income to a record $123.4 billion in 2013 before collapsing due to abundant harvests worldwide. “In 2019, global production will continue to expand, trade challenges will persist, and these factors will continue to impact commodity prices,” said Agriculture Secretary Sonny Perdue in House testimony last week. “As a result, many farmers will continue to face tight bottom lines with fewer resources.” In this, its first forecast of 2019 farm income, the USDA said that higher market prices would mean larger crop and livestock receipts for producers than last year. Livestock production also is expected to rise, helping to generate revenue. Production expenses will rise fractionally, and government payments, which hit a 12-year high of $13.8 billion in 2018, are projected to fall by $2.3 billion. Termination of the so-called Trump tariff payments would account for most of the decline in government payments. Although farm debt is rising, so are farm assets. The debt-to-asset ratio, an indicator of stress, is forecast by the USDA to be 13.9% this year. This would continue a rise that began in 2012, although the ratio is still comparatively low. During the farm recession of the 1980s, the debt-to-asset ratio peaked at 22.9% in 1985. Land is often a farmer’s largest asset, and overall it accounts for more than 80% of assets for the sector. Federal Reserve banks in the Farm Belt say land values were stable going into this year...MORE