Could rising soybean prices lift struggling farmers weighed down by low commodity prices? That could depend on what they produce, according to USDA.
Net farm income is expected to drop 17.2% to $66.9 billion in 2016, the lowest in seven years, according to a report by USDA’s Economic Research Service.
However, farms producing mixed grains could see gains of 10.4% in net cash income, including a 15.1% increase from corn. Soybean cash receipts could increase by 16%—roughly $5 billion—per USDA estimates.
“Soybeans are going to be the income source in most areas,” says Gary Schnitkey, agricultural economist at the University of Illinois. “The difference in Illinois from other areas is the high yields."
Although Illinois is projected to have record-setting corn and soybean yields, “this is not the case in most other states,” Schnitkey says.
Total cash-crop receipts of $186.5 billion will be 24% lower, when adjusted for inflation, from their all-time high in 2012. Cash-corn receipts will fall by almost $2 billion from 2015, according to USDA.
Producers also are facing falling land values and cash rents, along with tougher terms for loans.
With U.S. farm debt rising 5.2% and farm asset values dropping 2.1%, the Federal Reserve Bank of Kansas City says bankers are demanding more collateral for farm loans.
USDA estimates farm asset values will drop 2.1%, and cash receipts are projected to drop 6.2% because of a 12.3% fall in animal-product receipts. Overall production expenses will drop 2.6% in 2016, the agency says.
Faced with declining earnings, farm families have been trimming budgets and increasing non-farm income, according to a study by the University of Illinois. Illinois farmers cut back living expenses by 3. 9% in 2015 to $78,538 for the year, the study found.
Health-care costs and insurance are among the biggest line items, says Veronica Nigh, an economist at the American Farm Bureau Federation in Washington, D.C.
“You see a wide degree of difference (in farmers' income) from state to state,” Nigh says.