The U.S. Department of Agriculture (USDA) is predicting a significant increase in farm income in the first projection for 2019. The 2019 Farm Sector Income Forecast that was released on March 6 from the USDA Economic Research Service demonstrates an expectation for net income to increase $6.3 billion for the year, an increase of about ten percent compared to 2018 which saw a decline of 16 percent.
“We’re looking at higher prices and that will contribute to higher cash receipts,” said USDA Deputy Chief Economist Warren Preston, who noted that cash receipts for all commodities are expected to be about 2.3 percent higher than last year. “In crops, we’re looking at an increase in farm cash receipts of about $4 billion,” said Preston, who also mentioned that the report shows “corn up 5.2 percent, cotton up 6.5 percent, fruit and nuts up 8.2 percent, and wheat up 5.4 percent.” Cash receipts for livestock are also expected to increase $4.6 billion largely due to record production and higher prices. Preston also noted that a seven percent drop in egg receipts is expected, as well as a 3.2 decline for hogs.
The projection for $69.4 billion in net farm income is a sizeable increase, however, it does not offset the numbers from 2018 which was the second-lowest year for net income in the past decade. Information that was released in February in the USDA’s long-term agricultural projections indicated that net farm income would be closer to $78 billion for 2019. The latest projection takes into account current supply and demand information and is reported to be more in-line with overall farm economy trends when removing unusually years. “The sectors risk of insolvency is at the highest level since 2002, but we’re still well below the levels that we saw in the 1980s. So, the likelihood of default across the sector does remain historically low,” said Preston.
An update to USDA projections is expected to be released at the end of August.