U.S. farm income plummeted by a combined 31 percent in 2014 and 2015. It will fall again this year, says a USDA forecast, but by a modest 2-3 percent. Large crop-subsidy payments, estimated at $9.5 billion, will buffer a 4-percent drop in livestock receipts and a 1-percent decline in crop receipts. Market prices for most field crops are forecast to continue to fall, as are prices for cattle, hogs, poultry, eggs and milk.
“Cash receipts for corn and soybeans — historically the crops generating the highest cash crop receipts — are both expected to be fairly flat in 2016,” said the USDA in its first Farm Sector Income forecast of the year. A 1-percent decrease in production expenses would provide some cushion.
“With a third straight year of lower commodity prices and income forecast in 2016, farm real-estate values are expected to decline modestly,” said the USDA, estimating a decline of 1 percent in value while farm debt increases 2 percent. As a result, the debt-to-asset ratio would rise to 13.2 percent, the highest since 13.6 percent in 2009.
The debt-to-asset and debt-to-equity ratios have been on the rise since 2012 but are low by historical standards. “As such, the sector appears to remain well insulated from the solvency risk associated with declining commodity prices, adverse weather, changing macro-economic conditions and the fluctuations in farm asset values.”
Agriculture Secretary Tom Vilsack said some commodities were expected to show “a bit of an upswing.” USDA economists said receipts for cotton, rice, sorghum and turkeys were expected to rise this year.