Reduced cash receipts lead to lower expected net cash and net farm income for the third straight year
Net cash farm income (NCFI) and net farm income (NFI) are two common measures of farm sector profitability. NCFI includes cash receipts and farm program government payments less cash expenses; it represents the net cash income available to farmers in a given year. NFI is a broader measure that represents the net value added to the U.S. economy by the agricultural sector, and includes noncash transactions such as changes in inventories, capital replacement, and implicit rent and expenses related to the farm operators’ dwelling. Following several years of high income, both measures have trended downward since 2013. ERS forecasts that, in 2016, net cash farm and net farm income will fall to $94.1 billion and $71.5 billion, respectively ($84.6 billion and $64.3 billion, when adjusted for inflation); these values are below their 10-year averages in both nominal and inflation-adjusted terms. Lower forecasts for NCFI and NFI reflect price declines across a broad set of agricultural commodities in 2015 that are expected to continue in 2016. A forecast increase in government payments and decline in production expenses in 2016 only partially offset the drop in commodity receipts. Find additional information and analysis on the 2016 farm sector income forecast in ERS’ Farm Sector Income and Finances topic page, released August 30, 2016.
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