Errata: On December 12, 2014, the ERS farm income estimates for 2008-2013 and the 2014 forecast, released on November 26, were revised to correct coding and data input sourcing problems in the underlying farm income database. Revisions also incorporate new data that became available following the November 26 release. While changes to individual State level estimates may be larger, at the U.S. level, these corrections and data revisions increased 2013 net farm income by 2 percent, to $129 billion. Also affected were the value of year-end inventories and related measures in the balance sheet, as well as production expenses, total value of production, gross and net value added, the value of inventory change, and their respective crop components in the income statement. Net farm income forecast for 2014 increased 0.4 percent, to $97.3 billion.
Farm Sector Profitability Expected To Weaken in 2014
Net farm income is forecast to be $97.3 billion in 2014, down nearly 25 percent from 2013’s estimate of $129 billion. The 2014 forecast would be the lowest since 2010, but would remain $12.3 billion above the previous 10-year average. Offsetting changes in crop and livestock receipts leave higher expenses as the main driver of changes in 2014 net farm income from 2013. Net cash income is forecast at $108.2 billion, down over 17 percent from the 2013 estimate. Net cash income is projected to decline less than net farm income primarily because it reflects the sale of carryover stocks from 2013.
Crop receipts are expected to decrease by $25.1 billion (11.5 percent) in 2014, led by a projected $10.9-billion decline in corn receipts and a $9.5-billion decline in oil crop receipts. Livestock receipts are forecast to increase by $25.9 billion (14.2 percent) in 2014 largely due to anticipated record prices for beef cattle and milk. The elimination of direct payments under the Agricultural Act of 2014 results in a projected 4-percent decline in government payments due to offsetting supplemental and ad hoc disaster assistance payments related to drought. Total production expenses are forecast to increase $18.1 billion in 2014 extending the upward movement in expenses for a fifth straight year.
The rate of growth in farm assets is forecast to diminish in 2014 compared to recent years. The slowdown in growth is a result of lower net income leading to less capital investment, and moderation in the growth of farmland values. Farm sector debt is expected to increase 3.1 percent, slightly less than the expected increase in the value of farm assets (3.2 percent). Most of the anticipated increase in debt is for nonreal estate loans with lower income spurring demand for operating funds. Despite the anticipated higher debt, the historically low levels of debt relative to assets and equity reaffirm the sector’s strong financial position.
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Slight Decline Is Forecast for Median Farm Household Income in 2014
Median total farm household income is forecast to decrease slightly in 2014, to $70,564, down from $71,697 in 2013. Given the broad USDA definition of a farm, many farms are not profitable even in the best farm income years. The median farm income forecast for 2014, at -$1,682, is down slightly from the 2013 estimate of -$1,141. Most farm households earn all of their income from off-farm sources—median off-farm income is projected to increase 3.7 percent in 2014 to $64,825. (Note: Because they are based on unique distributions, median total income will generally not equal the sum of median off-farm and median farm income.) See more financial statistics for farm operator households.
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