U.S. net farm income will plummet by 21 percent this year, the government forecast, a much steeper drop than its August estimate of 14 percent points. “The changed outlook is largely the result of declines in expected crop prices,” said USDA in a quarterly report. Its forecast of farm income “is considerably less optimistic than the August forecast” – $96.9 billion vs $113.2 billion.
“The 2014 forecast would be the lowest since 2010 but would remain $16 billion above the previous 10-year average,” said USDA.
Crop receipts are forecast to fall by 12 percent – two-thirds of it in corn and soybeans – while livestock receipts are up by 14 percent. Beef and pork prices hit record highs this year. “Total production expenses are forecast to be 5.7 percent higher in 2014, which would be the fifth consecutive increase since last falling in 2009,” said USDA.
Farm sector debt will rise by 3.1 percent this year, “increasing more than assets for the first time since 2009,” said USDA. It says assets will rise by 2.4 percent, slowed by less capital investment and moderation in farmland prices.
Two gauges of financial health would hold steady – the debt-to-asset ratio at 11 percent and debt-to-equity at 12.37 percent, USDA said the rations are “near their post-1970 historical lows…As such, the sector remains well insulated from the risks associated with commodity production (such as adverse weather), changing macroeconomic conditions in the United States and abroad, and any fluctuations in farm asset values that may occur due to changing demand for agricultural assets.”