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USDA Sees Higher Farm Income


Net farm income is expected to rise 8.1% in 2019, according to the latest projection from USDA, but the increase won’t make up for the 17.8% drop in 2018.

USDA released its first farm income forecast for 2019 on Wednesday.

In its broadest measure of income, net farm income, USDA projects a $5.2 billion increase to $69.4 billion in inflation-adjusted 2019 dollars. Net farm income is defined as incorporating non-cash items, including changes in inventories, economic depreciation and gross imputed rental income.

Net cash farm income, a look at cash receipts and government payments minus expenses, is projected to rise $2.7 billion, or 2.9%. Despite the rise, net cash farm income is still expected to be the second-lowest level since 2009.

Both of the major income values are still projected to be below their averages from 2000-2017.

Commercial farms, which USDA pegs as having more than $350,000 in sales, will average $131,608 in farm income, a 10.3% bump from 2018.

According to USDA’s forecast, crop and livestock receipts are expected to rise a combined $8.6 billion.

The bulk of income gains for farmers will come from higher commodity prices, USDA stated. Crop receipts are expected to increase $4 billion, or about 2%. Corn cash receipts are projected to rise $2.5 billion, or 5.2%. Cotton, fruits and nuts, and wheat are also expected to see rising cash receipts. But soybean cash receipts are expected to decline $2.6 billion, or 6.6%, because of both lower prices and lower volumes sold.

Livestock receipts are projected to rise $4.6 billion, or 2.6%. Cattle and calf sales are expected to increase $2.6 billion, or 4%, and dairy is expected to see a $2.7 billion increase, or 7.8%. Hog receipts are expected to decline $700 million, or 3.2%, because of lower prices.

Government payments are expected to decline $2.3 billion to $11.5 billion. Market Facilitation Program payments are projected at $3.5 billion for 2019 after $5.2 billion in payments in 2018. Payments that are a function of crop prices — the Agricultural Risk Coverage and Price Loss Coverage programs — will drop $1.7 billion in 2019, a 45% decline. Conservation payments are expected to increase 8.6% to $4.3 billion.

Expenses will increase $2.2 billion, or just 0.6%, overall. USDA sees lower fuel, rent, pesticide, seed and fertilizer prices for crop farmers, partially because of a decline in crop acreage. Livestock and poultry purchases are also projected to drop in price. Interest costs, feed costs, labor and property taxes or fees are all expected to rise.

When adjusted for inflation, farm equity will rise $16.3 billion, or about 0.6%, but overall farm debt is forecast to increase 2.1%, adjusted for inflation, which is led by an increase in real-estate debt.

The widely watched overall sector debt-to-asset ratio will increase to 13.86% for 2019 from 13.55% for 2018. The farm sector’s risk for insolvency is the highest since 2009, but not nearly as high as the 1980s or even as high as 2002.

USDA’s next farm income forecast is set for Aug. 30.

Source: Chris Clayton, DTN

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