WASHINGTON, Feb. 10, 2015 – Despite new government subsidies, U.S. farm income will drop by nearly a third this year because of the plunge in the price of corn, milk and other commodities, the Agriculture Department says.

USDA’s Economic Research Services estimated Tuesday (ERS) that net farm income will fall from $108 billion last year to $73.6 billion in 2015, a decline of almost 32 percent. Net farm income reached a record high of $129 billion in 2013.

Because of the decline in market prices, government payments to farmers are projected to rise 15 percent this year to $12.4 billion, which would be the largest amount of farm subsidies since 2010.
Agriculture Secretary Tom Vilsack said that although farm income is dropping, it is decreasing “from a very high level.”
“Overall, agriculture still remains solid,” Vilsack told reporters in a conference call, noting that farm income levels are still 12 percent above the 10-year average and debt-to-asset ratios remain at record lows. “I don’t want people to extrapolate that we’re somehow in dire straits here, because we’re not,” he said. “We’re going to continue to see strong, better-than-average income for farms.”

The Agricultural Risk Coverage program, which triggers payments to producers when revenue falls below the county or farm average for the previous five years, is expected to pay out $4.8 billion, according to ERS.

A second program, Price Loss Coverage, is projected to pay growers about $1.4 billion. PLC provides payments when the average market price of a commodity falls below the level set by the farm bill, which is $3.70 a bushel for corn and $5.50 for wheat. Farmers must choose between the two programs.

The economists are also projecting that farmers will claim about $1.4 billion in disaster aid.

Cattle producers are forecast to see an increase in income this year, and receipts for broiler chickens could be up slightly. But most other commodities are expected to see declines.

Feed crop receipts are expected to drop from $66 billion last year to less than $59 billion this year. Sales of dairy products and milk are expected to drop from $49 billion to $38 billion in 2015.

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A slight decline in land values means that the rate of growth in farm assets will slow this year. Farm sector debt is expected to rise 3.1 percent, while the value of assets will likely rise by just 0.4 percent, the economists say.

The government is forecasting a sharp drop in household farm income, reflecting the decline in commodity prices.

Average household farm income this year is projected to be $15,908, down from $21,869 last year and the peak of $27,897 in 2013, according to ERS.