Farm Business Income

Average Net Cash Farm Income for U.S. Farm Businesses Forecast Down in 2018

Farm businesses (farms with annual gross cash farm income of over $350,000 or smaller operations where farming is reported as the operator's primary occupation) account for less than half of U.S. farms, but contribute over 90 percent of the farm sector’s value of production and hold the majority of its assets and debt. Average net cash farm income (NCFI) for farm businesses* is forecast at $69,800 in nominal terms in 2018, down 16.2 percent from 2017. This decline is consistent with NCFI for the whole farm sector, which is forecast to decrease by 8.4 percent (nominal). This would be the fourth consecutive year that farm business average NCFI has declined.** 

Lower NCFI means less cash available to pay down debt, pay taxes, cover family living expenses, and invest. It is not a comprehensive measure of profitability, however, because it does not account for changes in noncash income, including adjustments in farm inventory, accounts payable, accounts receivable, and capital consumption.

Average NCFI is forecast to decline in 2018 across all farming regions, but the forecast by commodity specialization is mixed. Driven primarily by lower cash receipts, farm businesses specializing in dairy are forecast to undergo the largest percentage decline (over 40 percent) in average NCFI in 2018. 

See data tables on farm business average net cash income, including: 

NCFI Expected To Decrease for Most Types of Farm Businesses

Average net cash farm income for farm businesses specializing*** in wheat, corn, and soybeans is expected to increase, while farm businesses specializing in cotton, specialty crops, and other crops are expected to see declines in 2018. Farm businesses specializing in specialty crops are expected to undergo the largest percentage and dollar decline (down $31,900 per farm or 15.1 percent) due to expected higher production expenses and lower cash receipts. In contrast, farm businesses specializing in wheat are expected to see the largest percentage and dollar increase (up $9,200 per farm or 10.7 percent) due to higher cash receipts and government payments.

Average net cash farm income (NCFI) for farm businesses specializing in crop production, 2018F compared with 2017
Farm specialization Average NCFI, 2018F Change in average NCFI, 2017-18F
  Dollars Percent
Wheat $95,000 10.7
Corn $144,400 4.1
Soybeans $97,100 3.2
Cotton $223,500 -6.3
Specialty crops $179,500 -15.1
Other crops $68,500 -2.6
Source: USDA, Economic Research Service, Farm Income and Wealth Statistics data product, Farm business average net cash income by commodity specialization and region. Data as of November 30, 2018.

Average NCFI for farm businesses specializing in all types of livestock production is forecast to decrease in 2018, with the largest decreases—both in dollar and percentage terms—for farms specializing in dairy. Following an increase in 2017, average NCFI for dairy farms is forecast to decline $97,900 (40.5 percent) to $143,600 per farm—reflecting an anticipated decline in milk prices. Average NCFI for farm businesses specializing in cattle/calves is expected to decline $6,500 (25.2 percent) to $19,300 per farm, following declines in cash receipts and increased production expenses.

Average net cash farm income (NCFI) for farm businesses specializing in animals/animal products production, 2018F compared with 2017
Farm specialization Average NCFI, 2018F Change in average NCFI, 2017-18F
  Dollars Percent
Cattle/calves $19,300 -25.2
Hogs $214,300 -19.7
Poultry $91,200 -7.3
Dairy $143,600 -40.5
Other livestock $17,900 -0.6
Source: USDA, Economic Research Service, Farm Income and Wealth Statistics data product, Farm business average net cash income by commodity specialization and region. Data as of November 30, 2018.

Average Net Cash Farm Income for Farm Businesses Lower Across All Regions in 2018

Regional performance can vary considerably due to the strong geographic concentration of certain production specialties. Nonetheless, all nine resource regions (see ERS resource regions) are expected to see lower NCFI in 2018. Dairy’s weak forecast performance and lower livestock receipts for 2018 are expected to affect many regions, contributing to a forecast 23.4-percent decrease in average NCFI for the Northern Crescent to $49,200. Farm businesses in the Eastern Uplands and Basin and Range are forecast to see the largest percentage declines in average NCFI, largely due to higher production expenses.


*Farm businesses are defined as operations with gross cash farm income of over $350,000 (labeled "commercial") or smaller operations where farming is reported as the operator's primary occupation (labeled "intermediate"). Approximately 11 percent of U.S. farms are commercial and 37 percent are intermediate. "Residence farms" comprise the remaining 52 percent of operations. These are small farms operated by those whose primary occupation is something other than farming.

**Changes in questionnaire design in the 2017 Agricultural Resource Management Survey (ARMS) contributed to a change in the share of farming operations classified as farm businesses. That share was 48.5 percent in the 2017 ARMS survey, compared with 40.2 percent in 2016 and 41.0 percent in 2015. More principal operators on smaller farms reported their primary occupation as "farming" rather than "retired" in 2017. These farms are considered farm businesses. As a result of this change in the composition of this group, caution should be used in comparing data from 2017 and the 2018 forecast with data from earlier years.

***Commodity specialization is determined by a farm business having at least 50 percent of the value of production from a particular commodity. Farm businesses often produce multiple commodities, so average net cash farm income statistics should not be interpreted as resulting solely from the production and sale of the commodity highlighted as the commodity specialization.