In its latest farm sector income forecast, USDA has again lowered projections, landing on an expected 27.7% drop in net cash income and 38.2% drop in net farm income.
Crop receipts are expected to decrease by 8.7%, an equivalent of $18.2 billion in 2015, led by a forecast $8.6-billion decline in corn receipts, a $5.7 billion drop in soybean receipts, and a $2.7 billion drop in wheat receipts.
Livestock receipts also could fall, but by a larger percentage – 12%, equivalent of $25.4 billion in 2015. That represents a reversal from the 43.8% increase in receipts over 2005-14 period.
Despite lower expectations for livestock and crops, projections indicate a rise in specialty crop receipts in 2015 and final farm income for 2014 was revised upward by $1.9 billion since August and $13.5 billion since February.
"Overall, today's projections provide a snapshot of a rural America that continues to remain innovative, stable and resilient in the aftermath of the worst animal disease outbreak in our nation's history and as the western United States unloosens itself from the grip of historic drought," USDA Secretary Tom Vilsack said.
"Today's estimates also indicate that new 2014 Farm Bill safety net programs are working as intended and helping producers protect their operations from changes in the marketplace," he added.
According to the report, government payments are projected to rise 10.4% or $1billion to $10.8 billion in 2015. New commodity-based programs introduced as part of the 2014 farm bill and implemented for the first time in 2015—such as the Price Loss Coverage and Agricultural Risk Coverage programs—are now the largest source of government payments to the farm sector.
In contrast to increasing commodity program payments, the largest decline in payments relative to 2014 is expected in the Supplemental and Ad Hoc Disaster Assistance category, down $3.1 billion to $1.7 billion in 2015.
Meanwhile, production expenses are also forecast to decline by $7.7 billion or about 2%. The forecast decline in expenses is driven primarily by lower spending on feed, fuel, and fertilizer, which outweigh expected increases in spending on labor, interest, and property taxes/fees.
Feed expenses, for example, are expected to be over $5 billion or 8.5% lower in 2015, while fuel and oil expenses are forecast to decrease by over 28% to $12.7 billion
Labor costs, however, are expected to increase in 2015 by over 4%, with most of the increase driven by higher expected wage rates.
See the full ERS entry online: Farm Sector Profitability Expected To Weaken in 2015