U.S. Farm Income Set to Drop 22 Percent

February 10, 2015 04:22 PM
 
U.S. Farm Income Set to Drop 22 Percent

Declining commodity prices will reduce the 2015 cash profits of U.S. farmers to $89.4 billion, the third straight decline and the biggest single-year drop since 1931-1932, according to the Department of Agriculture.

 

Revenues from corn, wheat and other crops will be $182.6 billion, a 7.9 percent decline from 2014, with lower prices pinching sales for equipment maker Deere & Co. and chemical makers including Syngenta AG. Livestock sales will fall 4.9 percent from last year’s record, the USDA said in its first farm-income forecast of the year.

“Our ability to produce is outrunning our markets,” said Harwood Schaffer, an agricultural economist at the University of Tennessee in Knoxville, in an interview before the report was released. “Farmers are getting squeezed.”

Boom times are ending for U.S. farmers, who are tightening their belts as low crop prices and rising costs erode incomes that peaked earlier this decade. Decreasing profits is also eroding the value of land, Farmers National Co., which manages 2.1 million acres of farmland in 24 states, said last week.

Expenses for this year including seed, fertilizer and animal feed will be $332 billion, up 0.5 percent from 2014. Total farm assets are seen rising 0.4 percent to $3 trillion as total farm debt gains 3.1 percent to $327.4 billion.

‘Sharpening Pencils’

 

“With profits coming down, farmers are sharpening their pencils when it comes to input purchases,” Gregory Friedman, vice president of investor relations at Wilmington, Delaware-based DuPont Co., a maker of seeds and crop chemicals, said in a Jan. 27 conference call. Higher inventories in the Americas will present “headwinds” in chemicals, Friedman said.

 

Seed-care sales, which include chemical treatments, in the Western Hemisphere have been harmed by lower corn acreages and prices, Syngenta Chief Financial Officer John Ramsay said in a Feb. 4 earnings conference call. The Basel, Switzerland-based company reported 2014 sales in North America fell 7 percent, even as global sales increased.

The decline in U.S. farmers’ net-cash income, a reliable measure of cash flow used to make purchases, would be for the third consecutive year since reaching a record $137.1 billion in 2012. Total net-farm income, a measure that includes the value of inventories, will be $73.6 billion, down 32 percent from last year and a record $129 billion in 2013.

The USDA’s next forecast will be in August, before this year’s harvest.

 

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Comments

 
Spell Check

Lynette
Hamilton, OH
2/11/2015 08:18 AM
 

  I'd like to see our entire government staff take a 22% cut in their take home pay but still work 7 days a week. The White House is killing the family farm. This article needs to be in local newspaper and on TV news. Everybody else thinks we are swimming in profits.

 
 
Dick James
Bremen, IN
2/10/2015 07:18 PM
 

  Thank yous too...Big AG Biz, Uncle Sam, Wall Street and Free Trade......

 
 
E
D, IL
2/11/2015 11:07 AM
 

  Lefty, do you really think farmers want to spend all of their money on farm equipment and storage facilities? We have to update equipment, repair facilties, build new storage because the newer equioment doesn't fit in the old shed. We build grain bins to save on storage costs, it takes awhile to pay urself back with that route but it helps. Don't say that we are all swimming with money, that's an idiotic comment. Most of our income is out back into our farms, given to the government, and the money left over is our living income. We don't get a raise, we don't get a Christmas bonus. Every year it is a different income, we may have a disaster, big repair bills, low markets. We're blessed that we even have good years. Im sure your income stays the same even if it doesn't rain.

 
 

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