U.S. farm income will be slightly higher than expected this year due chiefly to $4.7 billion in Trump tariff payments that will buffer the impact of trade war on commodity prices, says the USDA. With the bailout, farmers are forecast to collect $13.6 billion in direct farm payments, the largest amount in 12 years.
Across the Farm Belt, ag bankers forecast a continued decline in farm income as winter arrives, reported four regional Federal Reserve banks on Thursday. Low commodity prices worry farm lenders, and a Minnesota banker said that the “trade war needs to be resolved to provide stability for customers.”
Farmers typically try to stretch their dollars during the summer in the expectation that payday will arrive with the fall harvest. Not this year. Ag bankers report the largest summertime increase in non-real-estate loan volume in 16 years and it was driven primarily by demand for operating loans to pay day-to-day expenses, said a quarterly Federal Reserve report.
Already-bulging U.S. corn and soybean stockpiles are much larger than expected, said a USDA report, compounding the effects of a trade war and bumper crops on the farm economy. Farm income this year is forecast to be the lowest since 2006.
Corn may be more profitable than soybeans in 2019, but that isn’t saying much about the outlook for midwestern farmers, say a pair of agricultural economists from the University of Illinois.
When it decides whether to make a second round of Trump tariff payments, the USDA said on Thursday, it will consider changes in tariffs, commodity prices, and other market conditions since it announced that $4.7 billion would be split among the producers of seven commodities this fall.
The mammoth corn and soybean crops awaiting harvest across America are larger than expected, the USDA said on Wednesday in its monthly Crop Production report.
U.S. farm income is higher than expected this year and is regaining its footing after taking a tumble early this decade, said the Agriculture Department on Thursday. Nonetheless, net farm income will be the lowest since 2006, and the debt-to-asset ratio is rising for the sixth year in a row.
Nearly half of the $4.7 billion in Trump tariff payments will go to five midwestern states that are the largest soybean and hog producers in the country, said a farm group analysis on Tuesday. At the same time, an environmental group challenged the USDA to explain its opaque development of the bailout package.
Soybeans are the largest U.S. farm export to China, and growers of the oilseed may be in line for huge federal payments, worth an average of $85 an acre, to offset the impact of retaliatory Chinese tariffs. Corn growers, meanwhile, might not get enough per acre to buy a cup of coffee at many restaurants.