USDA-ERS recently released its Farm Income and Financial Forecasts report for 2016. Despite farm income sliding in recent years, Secretary of Agriculture Tom Vilsack remains optimistic about the rural economy.
"Today's forecast continues to show that the health of the overall farm economy is strong in the face of challenging markets,” he says. “After reaching record highs in 2012-2014, net farm income declined in 2015 and is forecast to decline in 2016, but the bigger picture shows that farm income over the last five-year period reflects the highest average five-year period on record.”
Here are several notable highlights from the report:
1. Overall cash receipts are expected to decline in 2016, but this decline is not universal across all commodities. Turkeys, rhe, cotton, miscellaneous oil crops and tobacco could see increases of more than 10%.
2. Direct government farm program payments could rise by $2.1 billion in 2016, a 19.1% increase from a year ago.
3. Total farm sector equity is down $79.9 billion, or 3.1%, in 2016. The bulk of this can be attributed to falling real estate values (down $12.0 billion); inventory value of crops, animals and purchased inputs (down $17.4 billion);
4. Production expenses were a mixed bag in 2016. Several categories increased from last year, including feed purchases, labor, pesticides and property taxes/fees. This was more than offset by decreases in other categories, including livestock/poultry purchases, fertilizer, seed, net rent, interest and fuel/oil.
Vilscak notes that rural counties added more than 250,000 jobs in 2014 and 2015, and the rural unemployment rate is below 6% for the first time since 2007.
"The future of rural America looks much brighter today, but we must continue to focus on the targeted investments to help the rural economy retool itself for the 21st century,” he concludes.