U.S. Farm Income to Hit 12-Year Low

USDA projects a drop in farm income ( Farm Journal )

Crop prices may be showing some recent signs of life, but that’s of little comfort for American farmers who are forecast to see their incomes fall to a 12-year low.

Farmer profits will drop 6.7 percent this year to $59.5 billion, the U.S. Department of Agriculture said Wednesday in its first forecast for 2018. That’s the lowest since 2006 and would be down 52 percent from a record $123.8 billion in 2013.

"This may now be what we consider a normal time," said Carl Zulauf, an agricultural economist who retired from Ohio State University after a long professorship. "The period from about 2007 to 2013, that was the exceptional period. Farmers have had to confront the adjustment."

An overhang of crop supplies has sparked a prolonged struggle in the farm economy. The decline in producer profits has crimped spending, hindering sales for companies like Deere & Co. to Monsanto Co. The downturn also helped spark a recent string of agricultural mega-mergers that have the potential to reshape the industry.

Revenue Drop

The USDA predicts 2018 crop revenues will drop 0.8 percent to $188.2 billion, while that from animals and related products decline 0.3 percent to $174.9 billion. Costs, meanwhile, are expected to climb 1 percent to $359.2 billion.

Years of sluggish profits have forced more farmers to take out loans to keep afloat. Farmers boosted borrowing 51 percent in the fourth quarter from a year earlier to buy inputs and pay bills, according to the Kansas City Federal Reserve. That was the most in two years and signals that rising interest rates may curb producer liquidity in 2018. Farm borrowing costs rose to a 27-year high of 4.5 percent on average last quarter, up from 3.7 percent a year earlier, further stretching repayment capacity.

Most farmers and lenders refrained from over-leveraging to expand operations from 2011 to 2013, when incomes and crop prices were about twice as high as they are today, according to Tim Koch, the chief credit officer at Omaha, Nebraska-based Farm Credit Services of America, which lent $28 billion last year in Iowa, Nebraska, Kansas, South Dakota and Wyoming. This restraint has allowed growers to tap equity to offset reduced profits and is one reason delinquency rates and non-performing loans remain relatively low compared with 30 years ago, during the last big income slump.

“A low debt-to-asset ratio compared to the 1980s means producers have time to work through the process of lower costs to match current low commodity prices,” Koch said. “We don’t have a debt issue, we have a cash flow issue that farmers can still work through.”

The majority of farmers are still in a “strong financial position,” and that should continue in 2018 with stable commodity prices, Koch said. They are working on reducing costs to remain competitive on the global export market, he said.



Restricted HTML

  • Allowed HTML tags: <a href hreflang> <em> <strong> <cite> <blockquote cite> <code> <ul type> <ol start type> <li> <dl> <dt> <dd> <h2 id> <h3 id> <h4 id> <h5 id> <h6 id>
  • Lines and paragraphs break automatically.
  • Web page addresses and email addresses turn into links automatically.
Submitted by Jackie on Fri, 02/23/2018 - 03:33

The USDA predicts 2018 yield incomes will drop 0.8 percent to $188.2 billion, while that from creatures and related items decrease 0.3 percent to $174.9 billion. Costs, in the mean time, are relied upon to climb 1 percent to $359.2 billion. Coursework writing services

Submitted by james on Sun, 02/25/2018 - 09:28

I have read your excellent post. This is a great job. I have enjoyed reading your post first time. I want to say thanks for this post. Thank you https://vegasweddingsplanner.com/

Submitted by Harry on Sat, 03/10/2018 - 05:51

The topic of this post is very interesting which is about us farm income hit 12 year low. It really increases our knowledge and I will must share it with others.
flyer printing

Submitted by prakashchandra on Tue, 03/20/2018 - 00:11

Delete window is the amazing features which helps us to know about the history of web pages deletebinghistory and also told us how to view the history.

Submitted by nehasharma on Mon, 05/28/2018 - 03:02

I really like your wonderful post. I loved to read such kind of article. and the first time I visit our website. and I happy to be here, thanks for sharing this amazing post.
Escorts in Delhi
Escorts in Dwarka