Commodities & Metals

Farm Income Forecast Dips Again

In its November forecast of farm sector income and finances, the U.S. Department of Agriculture’s Economic Research Services projects farm sector profitability will decline for the second straight year in 2015. The forecast published on Tuesday is even drearier than the August forecast.

Net farm income is forecast to reach $55.9 billion in 2015, down 38.2% from 2014’s estimated total of $90.4 billion. The 2015 forecast for net farm income would be the lowest since 2002 in both nominal and inflation-adjusted terms, and a drop of 55% from the record high of $123.3 billion in 2013.

Net cash farm income is now projected to fall 28% from $128.56 billion to $93 billion. As a measure of profitability, net cash farm income is generally less variable over time than the broader net farm income measure.

Crop receipts for 2015 are expected to decrease by $18.2 billion (8.7%) in 2015, led by a projected $8.6-billion decline in corn receipts, $5.7 billion in lower soybean receipts, and $2.7 billion in decreased wheat receipts compared with 2014. Livestock receipts are forecast to decrease by $25.4 billion (12%) in 2015, largely due to lower milk, hog, broiler, and cattle/calf prices.

The declines in crop and livestock receipts is largely driven by price rather than output changes.

Government payments are projected to rise 10.4% ($1 billion) to $10.8 billion in 2015, and total production expenses are forecast to decrease by $7.7 billion (about 2.3%). The increase in government payments is lower than the August projection, and the decline in production expenses is only the third such decline since 2000.

Median farm income levels  remain negative for farm households while off-farm income is expected to rise from $70,000 in 2014 to $72,494 in 2015. The median total farm household income in 2015 is now forecast to be down about 2.3% from $80,620 in 2014 to $78,284 this year. The USDA points out that most farm households earn all their income from off-farm sources.

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