Net Farm Income Forecast To Fall in 2014
Net farm income is forecast to be $95.8 billion in 2014, down 26.6 percent from 2013’s forecast of $130.5 billion. The 2014 forecast would be the lowest since 2010, but would remain $8 billion above the previous 10-year average. Lower crop cash receipts, and, to a lesser degree, a change in the value of crop inventories and reduced government farm payments, drive the expected drop in net farm income. Net cash income is forecast at $101.9 billion, down almost 22 percent from the 2013 forecast. Net cash income is projected to decline less than net farm income primarily because it reflects the sale of more than $6 billion in carryover stocks from 2013.
Crop receipts are expected to decrease more than 12 percent in 2014, led by a projected $11-billion decline in corn receipts and a $6-billion decline in soybean receipts. Livestock receipts are forecast to increase in 2014 largely due to higher milk prices. The elimination of direct payments under the Agricultural Act of 2014 and uncertainty regarding enrollment and payments during 2014 result in a projected 45-percent decline in government payments. On the other hand, total production expenses are forecast to decline $3.9 billion in 2014, which would be only the second time expenses declined in the last 10 years.
The rate of growth in farm assets, debt and equity is forecast to slow in 2014 compared to recent years. The slowdown in growth is a result of expected lower net income, higher borrowing costs, and moderation in the growth of farmland values. As a result, the value of farm assets is expected to rise 2.4 percent in 2014, while farm sector debt is expected to increase 2.3 percent. This represents a noticeable reduction in the average annual growth in each of these measures compared with the last 10 years. Nonetheless, the historically low levels of debt relative to assets and equity reaffirm the sector’s strong financial position.
Get the 2014 forecast for farm sector income.
Median Farm Household Income Expected To Be Largely Unchanged in 2014
Projected median total farm household income is expected to remain essentially unchanged in 2013 and 2014, with a slight increase between 2012 and 2013, followed by a slight decrease to $68,132 in 2014. Given the broad USDA definition of a farm, many farms are not profitable even in the best farm income years. With sectorwide net cash farm income forecast to decline in 2013 and 2014, median farm income is expected to decline to -$2,534 in 2014 (down from -$1,453 in 2012). Most farm households earn all of their income from off-farm sources—median off-farm income is projected to increase by 2.9 percent in 2013 and 3.5 percent in 2014, to $62,585. (Note: Because they are based on unique distributions, median total income will generally not equal the sum of median off-farm and median farm income.)
Get the 2014 forecast for farm household income.
- Agricultural Income and Finance Outlook for historical estimates and forecasts of farm sector financial information that allow readers to gauge the longer-term financial health of the Nation's farmers and ranchers