Thursday, November 30, 2017

USDA says farm sector profits will likely be stable this year, after three years of decline

After three consecutive years of decline, profits in the farm sector of the economy are expected to be relatively stable in 2017, according to a report on farm income and wealth from the U.S. Department of Agriculture. The report is released three times a year, in February, August and November.

"Net farm income, a broader measure of profits, is forecast to increase $1.7 billion (2.7 percent) from 2016 to $63.2 billion in 2017 and net cash income is forecast to increase $3.7 billion (3.9 percent) to $96.9 billion, in nominal terms. Inflation-adjusted net farm income is forecast to be relatively unchanged from 2016, while inflation adjusted net cash farm income is forecast to rise 2.1 percent," the USDA reports. "The stronger forecast growth in net cash farm income is largely due to an additional $2.1 billion (nominal) in cash receipts from the sale of beginning-of-year crop inventories. The net cash farm income measure counts those sales as part of current-year income while the net farm income measure counted the value of those inventories as part of prior-year income."

Chuck Abbott reports for, "In August, USDA said income was stabilizing after plunging in 2014 and 2015 and could increase slightly from 2016’s levels. Even so, income this year would be one half to three fourths of the record set at the peak of the commodity boom."

The USDA report says, "Farm sector equity—the difference between farm sector total assets and total debt—is predicted to rise $70.1 billion (2.7 percent) in 2017 to $2.65 trillion. Farm sector debt is expected to rise $11.0 billion (2.9 percent) to $385.2 billion, while an $81.1-billion (2.7 percent) increase to $3.0 trillion is anticipated in the market value of farm sector assets."

Abbott reports Ohio State University economist Ani Katchova said at a conference early this month, "Hopefully, the worst is over. Financial conditions seem to be improving, albeit slowly."

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