Farm sector profitability is expected to be down in 2015, USDA said Tuesday in its most recent forecast.
Net cash income is seen at $100.3 billion, down about 21% from 2014 levels. Lower crop and livestock receipts are the main drivers of the change in 2015 net cash farm income from 2014, while cash production expenses are projected down by 1.1%.
Net farm income is forecast to be $58.3 billion in 2015, down 36% from 2014's estimate of $91.1 billion.
The 2015 forecast for net farm income would be the lowest since 2006 (since 2002 in inflation-adjusted terms) and a drop of nearly 53% from the record high of $123.7 billion in 2013.
As a measure of profitability, net cash farm income is generally less variable over time than the broader net farm income measure. One explanation is that it is possible to exercise greater control on the timing of cash receipts and expenses and thereby moderate large swings from year to year.
"The past several years have seen unprecedented highs in farm income, and despite the fact that farm income is forecast to be down from record levels, today's projections provide a snapshot of a rural America that continues to remain stable and resilient in the face of the worst animal disease outbreak in our nation's history and while the western United States remains gripped by drought," USDA Secretary Tom Vilsack said of the forecast.
Crop receipts for 2015 are expected to decrease by $12.9 billion (6.2%) in 2015, led by a projected $7.1-billion decline in corn receipts, $3.4 billion in soybean receipts, and $1.6 billion in wheat receipts compared to 2014.
Livestock receipts are forecast to decrease by $19.4 billion (9.1%) in 2015 largely due to lower milk and hog prices. Government payments are projected to rise 16% ($1.6 billion) to $11.4 billion in 2015. Total production expenses are forecast to decrease by $1.5 billion (less than 0.5%) in 2015.
Farm asset values are forecast to decline by 3.5% compared to 2014, and farm debt is forecast to increase by 5.8%. The farm sector equity measure combines both of these, and is down by $123.9 billion, or 4.8% compared to 2014. The primary driver of the drop in asset values is farm real estate, down $49 billion (2.1%). Debt is driven by increases in both real estate debt (up 5.3%) and non-real estate debt (up 6.5%).
While the movements in the balance sheet show an increasingly leveraged farm sector, financial risk ratios remain in acceptable ranges for now, USDA said.
Vilsack said despite the lower forecasts nearly across the board, markets continue to expand for locally-grown food while the biobased economy has emerged as a new frontier for U.S. growth.
"American agriculture achieved record exports last year and USDA continues to pursue strong new trade deals so that farm and ranch businesses don't miss out on new markets for their products," Vilsack said.
See the full 2015 farm income forecast on the USDA website.