Farm sector profitability is forecast to decline for the third straight year. Net cash farm income for 2016 is forecast at $90.1 billion, down 14.6 percent from the 2015 estimate. Net farm income, a more comprehensive measure of profitability, is forecast to be $66.9 billion in 2016, down 17.2 percent. If realized, 2016 net farm income would be the lowest since 2009 in both real and nominal terms.
Overall, cash receipts are forecast to fall $23.4 billion (6.2 percent) in 2016 due to a $23.4-billion (12.3 percent) drop in animal/animal product receipts; crop receipts are forecast essentially unchanged from 2015. Nearly all major animal specialties—including dairy, meat animals, and poultry/eggs—are forecast to have lower receipts, including a 14.8-percent drop ($11.6 billion) in cattle/calf receipts. A marginal expected gain in crop cash receipts is driven largely by a $5.3-billion increase in oil crop receipts, primarily soybeans, while feed crops (mainly corn) and vegetables/melons are down $2.2 billion (3.8 percent) and $1.4 billion (6.9 percent), respectively. While overall cash receipts are expected to decline, receipts for several crop commodities are expected to increase by at least 10 percent above 2015 estimates, including cotton, up $0.9 billion (17.5 percent). Likewise, while animal and animal product receipts are forecast overwhelmingly down in 2016, turkey (up $0.6 billion or 10.6 percent) and miscellaneous livestock (up $0.2 billion or 2.9 percent) receipts both grew. Direct government farm program payments are projected to rise $2.1 billion (19.1 percent) to $12.9 billion in 2016.
After sharp declines in 2015, average net cash farm income for most farm businesses specializing in crop production is expected to improve. Net cash farm income is forecast up for farm businesses specializing in mixed grains (up 10.4 percent), corn (up 15.1 percent), and soybeans and peanuts (up 11.8 percent).
For the second year in a row, production expenses are down. Total production expenses are forecast down $9.2 billion (2.6 percent) compared to 2015, led by declines in farm-origin inputs (feed, livestock/poultry, and seed) as well as fuel/oils.
Farm asset values are forecast to decline by 2.1 percent in 2016, and farm debt is forecast to increase by 5.2 percent. Farm sector equity, the net measure of assets and debt, is forecast down by $79.9 billion (3.1 percent) in 2016. The decline in assets reflects a 0.5-percent drop in the value of farm real estate, as well as declines in animal/animal product inventories, financial assets, and machinery/vehicles. The rise in farm debt is driven by higher real estate debt (up 8.6 percent).
Get the 2016 forecast for farm sector income.
Median Income of Farm Operator Households Expected To Stabilize in 2016
The median income of farm households increased steadily over 2010-14, reaching an estimated $81,637 in 2014. After dipping in 2015, median farm household income is forecast to remain essentially unchanged in 2016 at an expected $76,839. Median farm income earned by farm households is estimated to be -$765 in 2015 and forecast to be -$1,412 in 2016. In recent years, slightly more than half of farm households have lost money on their farming operations each year; most of these households earn positive off-farm income—median off-farm income is forecast to increase 2.7 percent, from $67,500 in 2015 to $69,317 in 2016. (Because farm and off-farm income are not distributed identically for every farm, median total income will generally not equal the sum of median off-farm and median farm income.)