Dips in Farm Sector Profitability Expected Into 2016
Farm sector profitability is forecast to decline for the third straight year. Net cash farm income is forecast at $90.9 billion, down about 2.5 percent from the 2015 forecast levels. Net farm income is forecast to be $54.8 billion in 2016, down 3 percent. If realized, 2016 net farm income would be the lowest since 2002 (in both real and nominal terms) and a drop of 56 percent from its recent high of $123.3 billion in 2013.
Cash receipts are forecast to fall $9.6 billion (2.5 percent) in 2016, led by a $7.9-billion (4.3 percent) drop in animal/animal product receipts and a $1.6-billion (0.9 percent) decline in crop receipts. Nearly all major animal specialties—including dairy, meat animals, and poultry/eggs— are forecast to have lower receipts, as are vegetables/melons and feed crops. While overall cash receipts are declining, receipts for several commodities are expected to increase by at least 1 percent relative to 2015 forecast levels. Direct government farm program payments are projected to rise $3.3 billion (31.4 percent) to $13.9 billion in 2016 in response to the expected price environment.
Farm asset values are forecast to decline by 1.6 percent in 2016, and farm debt is forecast to increase by 2.3 percent. Farm sector equity, the net measure of assets and debt, is forecast down by $55 billion (2.2 percent) in 2016. The decline in assets reflects a drop in the value of farm real estate, as well as declines in crop inventories and financial assets. The increase in farm debt is driven by increases in both real estate debt (up 1.1 percent) and nonreal estate debt (up 3.8 percent).
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Median Income of Farm Operator Households Expected Up Slightly in 2016
Errata: Corrections made on May 2, 2016 to the underlying data source—the Agricultural Resource Management Survey (see Update and Revision History)—resulted in revisions to the farm income portion of farm household income (a component of the total income for farm households) reported for the years 2013-2016F. The median income from farming for households operating family farms increased between $500 and $750 per household in 2013-2016F. Farm sector-level data and analysis were not affected.
The median income of farm households increased steadily over 2010-14, reaching an estimated $81,637 in 2014. After a slight dip in 2015 to $79,509, median household income is forecast to rebound in 2016 to an expected $83,255. Median farm income earned by farm households is forecast to be -$937 in 2015 and -$780 in 2016. Most farm households earn all of their income from off-farm sources—median off-farm income is forecast to increase 4.1 percent, from $72,418 to $75,354 in 2016. (Because farm and off-farm income are not distributed identically for every farm, median total income will generally not equal the sum of median off-farm and median farm income.)
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