The squeeze of a tight farm economy is all too familiar for many farmers. More than half of farm households lost money the past two years, and USDA Economic Research Services (ERS) estimates that number is only going to get bigger.
In its most recent findings, ERS says net farm income will drop by 8.7% to $62.3 billion in 2017. This marks the fourth consecutive year it has dropped after a record high in 2013 and represents the lowest net farm income since 2002, after inflation adjustments.
Net cash farm income, however, is expected to rise by $1.5 billion from the 2016 value to $93.5 billion—a 1.8% increase. This is because ERS anticipates $8.2 billion in cash receipts from selling crop inventories. Net cash farm income shows those receipts on 2017 while net farm income measures those values as a part of previous year’s income.
The value of farm assets is predicted to decline by 1.1% and farm debt will increase by 5.2%. The rise in farm debt is caused by a 7.3% increase in real estate debt. Farm sector equity is expected to drop by $51.2 billion (2.1%).
Median household income could still rise by 3%, due to anticipated increases in off-farm earnings from $69,490 to $72,022. However, farm income is expected to decrease by $1,437 compared to a 2015.
Expect production expenses to remain flat. Following two years of decline, production expenses have leveled out, with expenses such as feed, livestock and seed down 2.6% as a group. Manufactured input prices are more mixed. Fertilizer expenditures are expected to be down by 9.1%, but fuel/oil expenses could jump up 13.1%. Labor costs, meantime, are forecast to rise 5.4%.