Income will be down about 53 percent from a record high of $123.7 billion in 2013, when crop supplies were tighter. However, hog prices are expected to drop sharply.
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The U.S. farm sector continues to face a tough ’15. U.S. growers this autumn are expected to produce bumper harvests again, which has kept prices depressed for the two commodities.
As a measure of profitability, net cash farm income is generally less variable over time than the broader net farm income measure. Mitch Morehart, senior ag economist at USDA’s Economic Research Service, said that cattle receipts are down only slightly but still remain strong relative to recent history.
Mr. Justison said falling crop prices have significantly reduced cash flow for many Midwestern growers, forcing them to carefully scrutinize what once were regular purchases. Last week, Deere & Co., the world’s largest seller of tractors and harvesting combines, said its profit in its July-ended third quarter tumbled 40% as weak crop prices curb farmers’ appetite for new equipment. Corn prices are now less than $3.70 a bushel, compared to an average of $7 in 2012.
Cash receipts from crops (an estimated $195 billion in 2015) and livestock (an estimated $192.8 billion) are both down, by 6.2% and 9.1%, respectively. Since hitting a record high in 2012, corn receipts have fallen 35%.
Given low prices for farm products, it’s not surprising to see that government payments are expected to rise in 2015: $11.4 billion, an increase of 16.3% compared to a year ago.
“Today’s farm income forecast is heartening for all Americans”, said Agriculture Secretary Tom Vilsack.
Where do you expect to trim costs during the rest of 2015 and in 2016?
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Net farm income is forecast to be $58.3 billion in 2015, down 36 percent from 2014’s estimate of $91.1 billion. “After several years of improvement, farm financial risk indicators such as the debt-to-asset ratio are expected to increase in 2015, indicating increasing financial pressure on the sector”. Total production expenses are forecast to decrease by $1.5 billion (less than 0.5 percent) in 2015. Fuel and oil costs likely will decline by nearly 28%, according to the USDA, while expenses related to the three main crop inputs-seeds, fertilizer and pesticides-also will decrease.
