U.S. net farm income, down for the third year in a row, will edge upward in coming years, thanks to modestly higher crop prices, says the think tank Food and Agricultural Policy Research Institute in a dour look at the farm economy. As land values decline, the debt-to-asset ratio, a commonly used gauge of farm financial health, will rise to 14 percent in 2019, compared to the current 12 percent.
Despite its forecast of an improvement in crop prices, FAPRI said, “Even in 2019, however, nominal net farm income remains below the 2015 level.” The University of Missouri think tank estimated net farm income, the net value of production in a calendar year, at $70.8 billion this year and $79.9 billion in 2019, compared to $80.7 billion last year. The record is $123.8 billion, set in 2013, just before the collapse of the agricultural boom that began in 2006.
The USDA will make its first forecast of farm income for 2017 in a few months; FAPRI estimates a $2 billion increase from 2016.
With the sharp drop in income, many farmers are tightening their belts. Sales of farm equipment are down. FAPRI says the U.S. average value of farm real estate will drop by 9 percent by 2019.