Farm Sector Profits Expected To Decline in 2018
Net farm income, a broad measure of profits, is forecast to decrease $4.3 billion (6.7 percent) from 2017 to $59.5 billion in 2018, the lowest net farm income level in nominal dollar terms since 2006. Net cash farm income is forecast to decrease $5.0 billion (5.1 percent) to $91.9 billion, the lowest level since 2009. In inflation-adjusted (real) 2018 dollars, net farm income is forecast to decline $5.4 billion (8.3 percent) from 2017 and, if realized, would be the lowest real-dollar level since 2002. Real net cash farm income is forecast to decline $6.7 billion (6.8 percent) from 2017, which would be the lowest real-dollar level since 2009. Net cash farm income includes cash receipts from farming as well as farm-related income, including government payments, minus cash expenses. Net farm income is a more comprehensive measure that incorporates noncash items, including changes in inventories, economic depreciation, and gross imputed rental income.
Cash receipts for all commodities are forecast to fall (in nominal dollars) $2.0 billion (0.5 percent) in 2018 to $363.1 billion. Relatively small annual declines are predicted for both animal/animal product (0.3 percent) and crop (0.8 percent) receipts. Forecast declines in receipts for milk and poultry/eggs are expected to more than offset a forecast increase in meat animal receipts. A forecast $1.7-billion (4.5 percent) increase in soybean receipts will be more than offset by expected declines in receipts for wheat, corn, cotton, fruits/nuts, and vegetables/melons. Direct government farm payments are forecast to decline $2.1 billion (18.6 percent) to $9.3 billion in 2018, reflecting large declines in Agricultural Risk Coverage and Price Loss Coverage payments.
Total production expenses (including operator dwellings) are forecast up $3.5 billion (1 percent) in nominal terms to $359.2 billion in 2018, led by increases for fuels/oil, interest, and hired labor. Partially offsetting these increases are an expected drop in feed expenses.
The 2018 forecast for farm business average net cash farm income is $93,200, the 4th consecutive decline since 2014 and the lowest average since 2011, in nominal dollars. A 6.2-percent ($2,100) increase is expected for cattle and calf farm businesses. Average net cash farm income for hog, poultry, and dairy farm businesses—along with all crop farm business categories—is forecast to decline in 2018, with wheat and dairy farms expected to see double-digit (percentage) declines.
Farm sector equity (nominal) is forecast up by $43.7 billion (1.6 percent) to $2.7 trillion in 2018. Farm assets are forecast to increase by $47.5 billion (1.6 percent) to $3.1 trillion in 2018, reflecting an anticipated 2.1-percent rise in farm sector real estate value. Farm debt is forecast to increase by $3.8 billion (1.0 percent) to $388.9 billion, led by an expected 1.2-percent rise in real estate debt.