Highlights From the August 2018 Farm Income Forecast
Farm Sector Profits Expected To Decline in 2018
Net farm income, a broad measure of profits, is forecast to decrease $9.8 billion (13.0 percent) from 2017 to $65.7 billion in 2018, after increasing $13.9 billion (22.5 percent) in 2017. Net cash farm income is forecast to decrease $12.4 billion (12.0 percent) to $91.5 billion. In inflation-adjusted 2018 dollars, net farm income is forecast to decline $11.4 billion (14.8 percent) from 2017 after increasing $13.0 billion (20.3 percent) in 2017. If realized, inflation-adjusted net farm income would be just slightly above its level in 2016, which was its lowest level since 2002. Inflation-adjusted net cash farm income is forecast to decline $14.6 billion (13.8 percent) from 2017 to $91.5 billion, which would be the lowest real-dollar level since 2009. Net cash farm income encompasses 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 of operator dwellings.
Note: The 2018 forecasts for U.S. farm sector income and finances—including government payments, net farm income, and net cash farm income—do not include payments under the Market Facilitation Program (MFP), announced on July 24, 2018. Details released August 27, 2018 on the package to assist farmers in response to trade disputes are here. ERS forecasts are developed assuming a continuation of existing policies. At the time the August forecast was released, it was too early to tell how many producers would complete the MFP enrollment process and receive a payment in 2018 versus 2019, or how the eligibility criteria would impact the total level of payments issued (which would change calendar-year 2018 farm income totals).
Cash receipts for all commodities are forecast to remain nearly stable in 2018 at $374.0 billion. Both total animal/animal product and total crop receipts are forecast to be relatively unchanged from 2017 as increases in receipts for some commodities are offset by declines in other commodities. Receipts for milk are expected to decline $2.8 billion (7.4 percent) in 2018 while receipts for poultry/eggs are expected to increase $5.2 billion (12.1 percent). A forecast $0.8-billion (1.8 percent) decrease in corn receipts will be partially offset by a forecast $0.5-billion (6.3 percent) increase in receipts for wheat. Direct government farm payments are forecast to decline $2.0 billion (17.4 percent) to $9.5 billion in 2018, with most of these declines due to lower anticipated Agriculture Risk Coverage and Price Loss Coverage program payments.
Total production expenses (including operator dwelling expenses) are forecast up $11.8 billion (3.3 percent) in nominal terms to $365.9 billion in 2018, led by increases for fuels/oil, interest, feed, and hired labor.
The farm business average net cash farm income is forecast to decline $16,600 (19.9 percent) to $66,700 in 2018. This would be the 4th consecutive decline since 2014 and the lowest average income recorded since the series began in 2010. All categories of farm businesses are expected to see declines with dairy farm businesses expected to see the largest decline. Every resource region of the country is forecast to see farm business average net cash farm income decline as well.
Farm sector equity is forecast up by $21.8 billion (0.8 percent) to $2.62 trillion in 2018. Farm assets are forecast to increase by $35.6 billion (1.2 percent) to $3.0 trillion in 2018, reflecting an anticipated 1.8-percent rise in farm sector real estate value. Farm debt is forecast to increase by $13.8 billion (3.5 percent) to $406.9 billion, led by an expected 4.4-percent rise in real estate debt. The farm sector debt-to-asset ratio is expected to rise while the total rate of return to farm assets is expected to decline in 2018.
Median Income of Farm Operator Households Expected To Decrease Slightly in 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 fell 6 percent in 2015 and has since decreased slightly. It is forecast to fall 0.7 percent from its 2017 level (2.8 percent in inflation-adjusted terms) to $75,474. Median farm income earned by farm households is estimated at -$800 in 2017 and is forecast to decline to -$1,691 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 2.8 percent from $67,500 in 2017 to $69,392 in 2018. (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.