This year will be another tight one for farmers, at least if the federal government’s predictions are correct.
Farm income will sink to its lowest point since 2009, according to the latest U.S. Department of Agriculture forecast. The USDA expects net farm income will drop 11.5 percent to $71.5 billion this year, which would mark the third-straight year of falling income.
“(Net farm income) is a bottom-line measure and it includes money available for farms to expand, to invest, or to pay down debt,” says Jim Williamson, an economist at the USDA. “What this means, it’s indicating they have a lesser ability to do that.”
Farmers expect another record harvest for corn and soybeans, the country’s most important crops, on top of recent bumper harvests. That oversupply is pushing down prices, leaving farmers in the lurch.
Wheat country is faring no better, with prices at ten-year lows and exports slumping, in part due to a strong dollar.
Dairy, meat, poultry and egg producers can all expect falling prices for their products, too, according to USDA data. Earlier studies showed Midwest farmers were also hammered last year by low prices.
With prices low, many farmers are cutting back on equipment, machinery and inputs, which could put the rural economy at risk.
Still, farm country is not in crisis. While the farm debt-to-asset ratio is rising, Williamson says, it is still fairly low compared to historical numbers. The debt-to-asset ratio during the 1980s farm crisis, for instance, was often twice as high as it is today.
One bright spot for farmers: the USDA expects direct government payments to farmers to increase nearly 25 percent this year, to $13.5 billion.
“Although net farm income for 2016 is forecast to decline relative to 2015,” Agriculture Secretary Tom Vilsack said in an emailed statement, “the 2014 Farm Bill has provided for a comprehensive farm safety net that will ensure financial stability for America's farming families.”