farmeconomy

Farm Business Income

Net Cash Farm Income for U.S. Farm Businesses Forecast Up in 2017

Farm businesses (farms with annual gross cash farm income of over $350,000 or smaller operations where farming is reported as the operator's primary occupation) account for less than half of U.S. farms, but contribute over 90 percent of the farm sector’s value of production and hold the majority of its assets and debt. Average net cash farm income (NCFI) is forecast at $109,800 for farm businesses* in 2017, up 2 percent from 2016. This is in line with the NCFI for the whole farm sector, which is also forecast to increase by about 2 percent. If realized, 2017 would be the second consecutive year with higher farm business NCFI after average NCFI fell more than 12 percent in 2015.

Higher NCFI means more cash available to draw down debt, pay taxes, cover family living expenses, and invest. It is not a comprehensive measure of profitability, however, because it does not account for noncash income changes, including adjustments in farm inventory, accounts payable, accounts receivable, and capital consumption.

The 2.2-percent increase forecast in 2017 builds on a small increase expected for 2016. This relatively stable forecast for all farm businesses masks substantial variation among commodity specializations and farming regions. Driven primarily by higher prices, farm businesses specializing in cotton or dairy are expected to realize double-digit growth in average NCFI in 2017. These farm businesses are also forecast to have among the highest levels of NCFI on average. As a result, the regions of the country with higher concentrations of dairy and cotton farming (ex., Northern Crescent, Southern Seaboard) are forecast to have the largest percentage growth in average net cash income.

Farm businesses are expected to incur lower expenses in 2017 for many of the inputs used to grow crops including seed, pesticide, and fertilizer.

Strong Growth in NCFI Expected for Cotton and Dairy Specialized Farm Businesses in 2017

Average net cash farm income for farm businesses specializing** in most types of crop production—except for cotton—is expected to remain stable in 2017, all within 6 percent of 2016 levels.

Average net cash farm income (NCFI) for farm businesses specializing in crop production, 2017F compared with 2016F
Farm specialization Average NCFI 2017F Change in average NCFI, 2016F-2017F
  Dollars Percent
Wheat $62,200 5.4
Corn $176,500 -1.4
Soybeans $100,200 1.8
Cotton $298,200 33.7
Specialty crops $244,400 -2.2
Other crops $99,800 0.1
Source: USDA, Economic Research Service, Farm Income and Wealth Statistics data product, Farm business average net cash income by commodity specialization and region.

After several years of declining income, cotton farm businesses are expected to see the largest increases in average net cash income in 2017 due to higher prices and output expected for upland/long-staple cotton and lower cash expenses.

Average NCFI for farm businesses specializing in livestock production is forecast to vary in 2017 depending on what the farm business primarily produces. 

Average net cash farm income (NCFI) for farm businesses specializing in animals/animal products production, 2017F compared with 2016F
Farm specialization Average NCFI, 2017F Change in average NCFI, 2016F-2017F
  Dollars Percent
Cattle/calf $35,700 -12.9
Hogs $256,500 -2.3
Poultry $109,200 3.2
Dairy $249,500 47.2
Other livestock $32,700 5.5
Source: USDA, Economic Research Service, Farm Income and Wealth Statistics data product, Farm business average net cash income by commodity specialization and region.
  • Dairy farms are expected to rebound in 2017 and are forecast to experience the largest increase in NCFI—in both absolute and percentage terms—of any commodity, reflecting anticipated increases in both milk price and quantity sold.
  • For farm businesses specializing in hogs, lower hog prices are expected to drive average NCFI 2.3 percent lower despite lower expenses for livestock purchases.
  • For poultry and egg farm businesses, higher prices—particularly for eggs—are expected to increase overall cash receipts and drive the average NCFI forecast up 3.2 percent to just under $110,000 in 2017. 
  • Cattle/calf farm businesses are forecast to have lower NCFI in 2016, with lower prices expected to diminish cash receipts and more than offset reduced spending on livestock inventory purchases.

Average Net Cash Farm Income for Farm Businesses Higher Across Most Regions in 2017

Regional performance varies considerably due to the strong geographic concentration of certain production specialties. Of the nine resource regions (see ERS resource regions), the Northern Great Plains, Eastern Uplands, and Heartland regions are forecast to have lower average NCFI in 2017.

  • Farm businesses in the Basin and Range are forecast to experience a 2.8-percent increase in average NCFI to $78,400, rebounding from an expected double-digit decline in 2016. For farm businesses in the Prairie Gateway, higher expected government payments and lower expenses are offset by lower cattle/calf cash receipts, resulting in an increase in average NCFI of 1.4 percent.
  • In the Northern Great Plains, falling NCFI for the region’s cattle and calf businesses contributes to an expected 2.4-percent decline in average NCFI to $135,500 in 2017.
  • Average Mississippi Portal NCFI is expected to remain stable in 2017 at $97,800 average NCFI.
  • Heartland farm businesses—with expected lower cattle and corn cash receipts offset by reduced fertilizer/livestock purchase expenses—are forecast to have an average NCFI of $129,700 in 2017, down 0.6 percent from 2016.
  • Farm businesses in the Eastern Uplands are expected to benefit from lower fertilizer and livestock purchase expenses, but not enough to offset expected declines in cash receipts, leading average NCFI about 1 percent lower to $24,400 in 2017. For the Southern Seaboard, average NCFI in 2017 is expected to be up $3,300 (5 percent) from the 2016 value of $65,800
  • Dairy’s forecast performance for 2017 is expected to affect many regions, contributing to a forecast 15.3-percent increase in average NCFI for the Northern Crescent to $76,700 and a 2.1-percent increase for the Fruitful Rim to $239,200. Offsetting the positive effect from dairy in the Fruitful Rim is a forecast reduction in NCFI for farm businesses growing specialty crops in 2017.
Farm business average net cash farm income by resource region, 2017F compared with 2016F

*Farm businesses are defined as operations with gross cash farm income of over $350,000 (labeled "commercial") or smaller operations where farming is reported as the operator's primary occupation (labeled "intermediate"). Approximately 10 percent of U.S. farms are commercial and 31 percent are intermediate. "Residence farms" comprise the remaining 59 percent of operations. These are small farms operated by those whose primary occupation is something other than farming.

**Commodity specialization is determined by a farm business having at least 50 percent of the value of production from a particular commodity. Farm businesses often produce multiple commodities, so average net cash income statistics should not be interpreted as resulting solely from the production and sale of the commodity highlighted as the commodity specialization.

Farm Sector Income & Finances

Related Topics

Last updated: Tuesday, February 07, 2017

For more information contact: Farm Income Team

Assistive Options

Top of page


Assistive Options

Open the original version of this page.

Usablenet Assistive is a Usablenet product. Usablenet Assistive Main Page.