Highlights
- Total production expenses are forecast to be 4 percent higher in 2014, which would be the fifth consecutive increase since last falling in 2009.
- Livestock receipts are expected to increase by more than 15 percent in 2014, due to a 21-percent increase in dairy, a 20-percent increase in hog, and a 15-percent increase in cattle receipts.
- Crop receipts are expected to decrease 7 percent in 2014 ($15.2 billion), led by a $12.8-billion decline in corn receipts.
- The elimination of direct payments under the Agricultural Act of 2014 is partially offset by higher payments for supplemental disaster assistance, resulting in a 15-percent decline in projected government payments.
- Farm equity is projected to reach another record, despite an expected slowdown in asset growth and the expectation of higher debt levels.
- Farm financial risk indicators such as the debt-to-asset ratio are expected to continue at historically low levels, indicating continued financial health for the sector.
Net Farm Income Forecast To Fall in 2014
Net farm income is forecast to be $113.2 billion in 2014, down about 14 percent from 2013’s forecast of $131.3 billion. The 2014 forecast would be the lowest since 2010, but would remain $25 billion above the previous 10-year average. Lower cash receipts for crops and, to a lesser degree, higher production expenses and reduced government farm payments, drive the expected drop in net farm income. Net cash income is forecast at $123 billion, down almost 6 percent from the 2013 forecast. Net cash income is projected to decline less than net farm income primarily because it reflects the sale of more than $10 billion in carryover stocks from 2013.
Crop receipts are expected to decrease more than 7 percent in 2014, led by a projected $12.8-billion decline in corn receipts and a $6-billion decline in soybean receipts. Livestock receipts are forecast to increase by more than 15 percent in 2014 largely due to higher prices. The elimination of direct payments under the Agricultural Act of 2014 results in a projected 15-percent decline in government payments. Total production expenses are forecast to increase $14.2 billion in 2014, extending the upward movement in expenses that has occurred over the past 5 years.
The rate of growth in farm assets, debt, and equity is forecast to slow in 2014 compared to recent years. The slowdown is a result of expected lower net income, higher borrowing costs, and moderation in the growth of farmland values. As a result, the value of farm assets is expected to rise 2.3 percent in 2014, while farm sector debt is expected to increase 2.7 percent. This represents a noticeable reduction in the average annual growth in each of these measures compared with the last 10 years. Nonetheless, the historically low levels of debt relative to assets and equity reaffirm the sector’s strong financial position.
Click here for the complete USDA-ERS 2014 forecast for farm sector income.
Slight Decline Is Forecast for Median Farm Household Income in 2014
Median total farm household income is forecast to decrease slightly in 2014, to $70,992, down from $71,504 forecast for 2013. Given the broad USDA definition of a farm, many farms are not profitable even in the best farm income years. Median farm household income continues to be negative when calculated for all farm households in the 2014 forecast. The median farm income of -$1,626 is down slightly from the 2013 forecast of -$1,140. Most farm households earn all of their income from off-farm sources—median off-farm income is projected to increase by 6.4 percent in 2013 to $62,500 and 3.7 percent in 2014 to $64,840. (Note: Because they are based on unique distributions, median total income will generally not equal the sum of median off-farm and median farm income.) See more financial statistics for farm operator households.
Click here for the complete USDA-ERS 2014 forecast for farm household income.
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