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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