Small Uptick in Farm Income
USDA Shows Higher Livestock Revenues, But Crop Income Continues to Fall
OMAHA (DTN) -- Cash receipts in the livestock sector are forecast to grow 7.6% for all of 2017 while receipts for crop producers are projected to fall 2%, according to USDA's latest farm income forecast released Wednesday.
Overall, net farm income is stabilizing and expected to provide a small bump in 2017 to $63.2 billion, or a 2.7% increase over 2016 numbers. The increase in the overall farm sector comes after three consecutive years of declines.
Still, when factoring in inflation, the net farm income -- a broad measure of farm profits -- is relatively unchanged from a year ago.
The farm income figures released Wednesday show a slightly better picture looking at "net cash farm income." That measure increased $3.7 billion, or 3.9%, to $96.9 billion. Taking inflation adjustments into account, net cash farm income rose 2.1%.
USDA designates "net cash farm income" as a measure counting cash receipts from sales of crop inventories at the beginning of the year. The net cash farm income counts those as current-year income. The "net farm income" measure counts the sales of those beginning-of-the-year inventories as part of prior-year income.
Even though both income measures are rising, net farm income in 2017 is still below all years from 2009 to 2015, and net cash farm income is lower in 2017 than the stretch of years from 2011 to 2015.
The median household income for farms in 2017 is $77,551, showing an increase of 1.7% for the year after falling 6% in 2015 and remaining flat last year. That was largely due to a 2.3% increase in off-farm income to an average of $67,973 for 2017. Median farm income remains in negative territory at -$1,093 as more than half of farms lost income on their farm operations.
While income remained low, comparatively, from seven or eight years ago, farm asset values increased by $81.1 billion, or 2.7%, to $3 trillion in 2017. Farm debt rose 2.9% to $385.2 billion. Nationally, farm equity, a measure of assets to debt, is up $70.1 billion, or 2.7%, to $2.65 trillion in 2017. The increase in assets is attributed to a 3.3% increase in the value of farm real estate. Subsequently, the rise in farm debt is also tied to higher farm real-estate debt.
All cash receipts in agriculture are projected at $365.1 billion for 2017, an $8.6 billion increase, or 2.4% higher than 2017. The main driver for higher cash receipts was a $12.4 billion bump in revenue from the livestock sectors. Dairy, poultry-eggs, hogs and cattle receipts all increased in 2017, USDA stated. That was reflected in both price and volumes sold.
Cash receipts for crops fell for crops by $3.8 billion, or 2%, to $189.9 billion. The main drivers were declines in receipts for soybeans, as well as the fruit and nut sectors.
Despite declines in crop cash receipts, farm program payments are projected to decline $1.8 billion as well, to $11.2 billion, as large declines in Agricultural Risk Coverage (ARC) payments more than offset increases in Price Loss Coverage (PLC) payments, USDA stated.
Total production expenses for agriculture are up 1.5% after two years of declines to $355.8 billion. Higher costs were led by higher interest costs, hired labor and fuels-oil. USDA saw declines in prices for feed and fertilizer expenses.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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