Highlights From the February 2018 Farm Income Forecast
Farm Sector Profits Expected To Decline in 2018
Net farm income, a broad measure of profits, is forecast to decrease $4.3 billion (6.7 percent) from 2017 to $59.5 billion in 2018, the lowest net farm income level in nominal dollar terms since 2006. Net cash farm income is forecast to decrease $5.0 billion (5.1 percent) to $91.9 billion, the lowest level since 2009. In inflation-adjusted (real) 2018 dollars, net farm income is forecast to decline $5.4 billion (8.3 percent) from 2017 and, if realized, would be the lowest real-dollar level since 2002. Real net cash farm income is forecast to decline $6.7 billion (6.8 percent) from 2017, which would be the lowest real-dollar level since 2009. Net cash farm income includes cash receipts from farming as well as farm-related income, including government payments, minus cash expenses. Net farm income is a more comprehensive measure that incorporates noncash items, including changes in inventories, economic depreciation, and gross imputed rental income.
Cash receipts for all commodities are forecast to fall (in nominal dollars) $2.0 billion (0.5 percent) in 2018 to $363.1 billion. Relatively small annual declines are predicted for both animal/animal product (0.3 percent) and crop (0.8 percent) receipts. Forecast declines in receipts for milk and poultry/eggs are expected to more than offset a forecast increase in meat animal receipts. A forecast $1.7-billion (4.5 percent) increase in soybean receipts will be more than offset by expected declines in receipts for wheat, corn, cotton, fruits/nuts, and vegetables/melons. Direct government farm payments are forecast to decline $2.1 billion (18.6 percent) to $9.3 billion in 2018, reflecting large declines in Agricultural Risk Coverage and Price Loss Coverage payments.
Total production expenses (including operator dwellings) are forecast up $3.5 billion (1 percent) in nominal terms to $359.2 billion in 2018, led by increases for fuels/oil, interest, and hired labor. Partially offsetting these increases are an expected drop in feed expenses.
The 2018 forecast for farm business average net cash farm income is $93,200, the 4th consecutive decline since 2014 and the lowest average since 2011, in nominal dollars. A 6.2-percent ($2,100) increase is expected for cattle and calf farm businesses. Average net cash farm income for hog, poultry, and dairy farm businesses—along with all crop farm business categories—is forecast to decline in 2018, with wheat and dairy farms expected to see double-digit (percentage) declines.
Farm sector equity (nominal) is forecast up by $43.7 billion (1.6 percent) to $2.7 trillion in 2018. Farm assets are forecast to increase by $47.5 billion (1.6 percent) to $3.1 trillion in 2018, reflecting an anticipated 2.1-percent rise in farm sector real estate value. Farm debt is forecast to increase by $3.8 billion (1.0 percent) to $388.9 billion, led by an expected 1.2-percent rise in real estate debt.
Median Income of Farm Operator Households Expected To Be Relatively Unchanged in 2017 and 2018
Farm households typically receive income from both farm and off-farm sources. The total median income of U.S. farm households increased steadily over 2010-14, reaching an estimated $81,637 in 2014 in nominal terms. Median household income, which fell 6 percent in 2015 and remained flat in 2016, is forecast to rise 3.5 percent from its 2016 level by 2018 to $78,886 (but decrease 0.8 percent in inflation-adjusted terms). Median farm income earned by farm households is estimated at -$940 in 2016 and is forecast to decline to -$1,316 in 2018. In recent years, slightly more than half of farm households have had negative farm income each year. Most of these households earn positive off-farm income—and median off-farm income is forecast to increase 2.3 percent from $66,468 in 2016 to $68,011 in 2017, and another 2.8 percent in 2018 to $69,940. (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.)
- Farm Sector Income and Finances for a discussion of the full farm sector income forecast.
- Farm Household Well-being for a discussion of the farm household income forecast.
- Farm Income and Wealth Statistics for the complete 2018 farm income forecast data and full history of U.S. and State farm sector estimates.
- Charts and Maps About Your State, Charts and Maps of U.S. Farm Sector Balance Sheet Data, and Charts and Maps of U.S. Farm Income Statement Data for farm sector data visualizations.
- Farm Household Income and Characteristics for data related to farm household income and characteristics.
- ARMS Farm Financial and Crop Production Practices data that underpin the farm income forecast and estimates.