U.S. farm income has been in a rut since the collapse of the commodity boom in 2013, and it is likely to grow only slowly after a bump upward in 2019, estimated a University of Missouri think tank. It its annual “U.S Baseline Outlook,” the Food & Agricultural Policy Research Institute also forecast a neck-and-neck race between corn and soybeans to be America’s No. 1 crop. FAPRI picked corn as the winner — the opposite of the USDA’s projections.
FAPRI and the USDA arrived at similar conclusions about farm income, however. Both say that net farm income, a measure of wealth that includes crops held in storage, will be roughly the same this year as in the preceding two years. If so, it would mean that farm income has stabilized at half of its 2013 peak. “This suggests continued pressure on farm finances in the years ahead,” said FAPRI, because debts remain high.
“Longer-term farm income strength probably requires some new demand pull,” said FAPRI director Pat Westhoff. For more than three decades, farmers consistently made money thanks to voracious import demand by China and the burgeoning U.S. biofuels market. Those markets are maturing, so crop farmers may need a new consumer — the “next ethanol,” said Westhoff wryly. For livestock producers, global economic growth may require a greater world appetite for meat, “which would boost not only livestock production and prices, but demand for feed as well.”
Net farm income is projected to rise by a few billion dollars in 2019, with higher crop prices as a factor, said FAPRI.
The USDA projects a virtual tie in corn and soybean plantings this year, at 90 million acres each. But “soybean area will match or exceed corn area for much of the next decade, supported by import demand from China,” said the agency’s chief economist, Robert Johansson.
FAPRI gives a slight edge to soybeans this year, which would mark the second time it is the most widely planted U.S. crop. Corn held the lead for the rest of the past decade, at 91 million to 92 million acres annually. “Even so, average soybean area remains at least 87 million acres, which had never occurred before 2017,” said FAPRI. Farmers planted a record 90.1 million acres last year. Before that, soybeans plantings peaked in 2016, at 83.4 million acres.