2017 farm profitability projections mixed
WASHINGTON — Depending on how you cut the numbers, the U.S. farm economy could get a little weaker — or a little stronger — in 2017.
U.S. net farm income in 2017 is projected to fall 8.7 percent to $62.3 billion, reaching its lowest level, adjusted for inflation, since 2002, the U.S. Department of Agriculture’s Economic Research Service said Tuesday.
Jeffrey Hopkins, chief of the farm economy branch in the resource and rural economy division of the Economic Research Service, presented the numbers online to the news media.
But another measure — net cash farm income — projects an improvement in 2017, rising 1.8 percent to $93.6 billion.
The difference reflects an additional $8.2 billion in projected 2017 sales of crop inventories. Net cash farm income measures the sales as current-year income, making 2017 look better financially; net farm income counts the value of inventories as prior-year income, making 2016 look better.
Both measures have value, Hopkins said.
Some farm sectors will fare better than others in 2017, relative to the previous year, the ERS predicted. Dairy and cotton, in particular, are expected to bring in more income, while wheat and cattle/calves are expected to bring in less.
That, in turn, will affect projected farm profitability in different regions of the country. The northeast United States, which includes a significant dairy presence, and the southern U.S., where cotton is a major crop, both show improvement. In contrast, the northern Great Plains, where wheat and cattle are important, show a decline, according to the ERS projection.
The ERS’s mission “is to anticipate trends and emerging issues in agriculture, food, the environment and rural America and to conduct high-quality, objective economic research to inform and enhance public and private decision making.”
As part of that mission, the ERS releases annual farm income statement and balance sheet estimates and forecasts in February, August and November.
Among other 2017 projections discussed Hopkins:
Total production expenses are forecast to remain flat. Purchases for feed and livestock/poultry will drop, while spending for fuel, labor and interest expense will rise.
Direct government farm program payments will drop 4 percent.
Farm assets will drop 1.1 percent, with farm debt increasing by 5.2 percent. That will weaken the debt-to-asset ratio, putting it above the 10-year average but still below its historic average.
The median income of U.S. farm households will rise 3 percent, the result of higher off-farm income that more than offsets a drop in on-farm income. Median is the middle number of a sequence of numbers.