The government will pay $6.5 billion in crop subsidies for this year’s grain and soybean crops because of falling commodity prices, according to an estimate by the Food and Agricultural Policy Research Institute, a think tank at the University of Missouri. The outlays would be the largest in seven years, said FAPRI, and would be well above its forecast average annual cost of $5 billion. “Payments under 2014 farm bill programs increase when crop prices fall,” said FAPRI. It says farmers will plant less corn and more soybeans this year than in 2014. Corn prices would recover somewhat with smaller plantings, estimated at $3.89 a bushel for this year’s crop compared to $3.65 for the 2014 crop. But soybean and wheat prices are forecast by FAPRI to slump again with the new crop.
“Lower prices translate into reduced farm income as both crop and livestock cash receipts decline in 2015,” said FAPRI. “Net farm income falls to $79 billion, a 27-percent decline from 2014. Net farm income declines further from 2016-18, to levels not seen since 2009.”
Food inflation was forecast at 1.6 percent this year, compared to the 20-year average of 2.6 percent.