WASHINGTON,
Nov. 25, 2015 - U.S. farm income will fall to $55.9 billion this year, from an
estimated $90.4 billion in 2014, a 38 percent decline and the biggest
single-year drop since the 1980s, according to an updated projection by USDA’s Economic
Research Service.
The report, the 2015 Farm Sector Income
Forecast, is the third such projection from ERS this year, and each successive
report has painted a more dismal picture than the one before it. In August, ERS
projected a 36 percent drop in net farm income to $58.3 billion, which was
greater than the 32 percent decline originally projected in February.
Net
farm income is projected to fall for the second consecutive year. Net cash
income is also expected to fall, by almost 28 percent. On a webinar Tuesday
afternoon, ERS economist Jeff Hopkins said the forecast continues to drop
mainly due to changing livestock figures.
“At
the beginning of the year in February, we did know that crop commodity prices
were going to be low. They started out low . . . and continued to be in that area,”
he said. In livestock, however, there were “big changes.”
Hopkins
pointed out that cash receipts for hogs are projected to fall 25 percent and
from dairy, by just over 28 percent.
When
the sectors are broken down, livestock receipts are expected to take a bigger
drop (12 percent, or $25.4 billion) than total crop receipts (8.7 percent, or $18.2 billion). The
livestock drop comes after a 43.8 percent increase in receipts between 2005 and
2014, and the decline in crop receipts is led by a forecast $8.6 billion drop
in corn receipts.
Falling
commodity and livestock prices are blamed for much of the decline rather than
any slips in production.
The
news in the report wasn’t all bad for producers. For the first time since 2009,
production expenses are expected to decline, by 2 percent, or about $7.7
billion. That decline comes after 9 percent annual increases from 2010 to 2014,
meaning 2015 expenses are still projected to be high by historic standards.
Government payments are also expected to increase, by 10.4
percent, or $ 1 billion, to $10.8 billion. The report says that farm bill
programs like Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC)
“are now the largest source of government payments to the farm sector.”
Agriculture Secretary Tom Vilsack said that despite the
projected drop in income, the report shows the strength of rural America.
“Overall, (the) projections provide a snapshot of rural
America that continues to remain innovative, stable and resilient in the
aftermath of the worst animal disease outbreak in our nation’s history and as
the western United States unloosens itself from the grip of historic drought,”
Vilsack said in a statement.
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