WASHINGTON, Aug. 26, 2014 – USDA’s latest projection for net farm income for 2014 shows income dropping sharply from 2013 but not as much as previously predicted.
Today’s report puts 2014 net farm income at $113.2 billion, down almost 14 percent from 2013’s forecast, but $17.4 billion higher than the $95.8 billion predicted in February. If realized, the forecast for 2014 would be the lowest in four years but still about $25 billion above the previous 10-year annual average, USDA said.
The main drivers in the increased forecast from February are the improved conditions in the livestock market as well as disaster programs that are beginning to pay producers for previous damages. Since February, anticipated livestock receipts were increased $26.2 million and anticipated government payments were raised $3.2 billion.
Most notably, the Livestock Forage Program (LFP) is sending millions to producers from drought events in 2012 and 2013, USDA said. Even though they are contributing to improved income forecasts since February, government payments are at their lowest amount since 1982 when adjusted for inflation.
In the report, USDA’s Economic Research Service (ERS) also said several livestock categories are expected to “benefit from record annual average prices in 2014.”
ERS said livestock receipts are expected to increase by more than 15 percent in 2014, with dairy jumping by 21 percent, hogs by 20 percent and cattle by 15 percent.
“That’s in line with recent price increases and the continued decades-long trend of tightened supply,” ERS Agricultural Economist Mitch Morehart said of the strong forecast for cattle receipts.
The crop outlook is not as optimistic. ERS said crop receipts are expected to decrease by 7 percent in 2014, or about $15.2 billion, with corn accounting for $12.8 billion of that drop. Even with the sharp decline predicted in today’s report, crop receipts are still projected to be about $11.5 billion higher than in February’s report, mainly due to a solid soybean crop and market.
Total production expenses are forecast to rise by 4 percent in 2014, which would be the fifth straight year inputs increased and would be the highest on record. Livestock and poultry purchases contribute to about $5.4 billion worth of the increase with increased fuel, repair, and labor costs also playing a role.
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