Net Farm Income Down 14%

Here are some things on farmers minds this fall as we start harvest.

• Net farm income is forecast to be $113.2 billion in 2014, down 13.8 percent from 2013’s forecast of $131.3 billion. If realized, the 2014 forecast would be the lowest since 2010, but would still remain more than $25 billion above the previous 10-year annual average.
• After adjusting for inflation, 2013’s net farm income is expected to be the highest since 1973; the 2014 net farm income forecast would be the fifth highest. Net cash income is forecast at $123 billion, down 6 percent from the 2013 forecast. Net cash income is projected to decline less than net farm income primarily because it includes the sale of more than $10 billion in carryover stocks from 2013. Net farm income reflects only earnings from current calendar-year production.
• Total production expenses are forecast to be 4 percent higher in 2014, which would be the fifth consecutive increase since last falling in 2009.
• Livestock receipts are expected to increase by more than 15 percent in 2014, due to a 21-percent increase in dairy, a 20-percent increase in hog, and a 15-percent increase in cattle receipts.
• Crop receipts are expected to decrease 7 percent in 2014 ($15.2 billion), led by a $12.8-billion decline in corn receipts.
• The elimination of direct payments under the Agricultural Act of 2014 is partially offset by higher payments for supplemental disaster assistance, resulting in a 15-percent decline in projected government payments.
• Farm equity is projected to reach another record, despite an expected slowdown in asset growth and the expectation of higher debt levels.
• Farm financial risk indicators such as the debt-to-asset ratio are expected to continue at historically low levels, indicating continued financial health for the sector.

Still, we are concerned about paying our bills from this year and how to keep our business profitable next year.  Many farms can weather this cash flow problem we are in but many cannot.

It's going to be an interesting next few years, especially the next few months.

Ed Winkle