USDA predicts net farm income will drop 27% in 2014

A drop in prices for corn and soybeans has led the U.S. Department of Agriculture to predict that the net income of U.S. farmers will drop 27 percent in 2014, to its lowest level since 2010, Jesse Newman reports for The Wall Street Journal. Last year's net income of $130.5 billion was the highest since 1973, when adjusted for inflation. "The USDA projected a decrease this year of $11 billion in U.S. corn receipts and more than $6 billion in soybean receipts."

The past several years have been good for farmers, with net incomes rising 90 percent from 2006 to 2011, Newman writes. The 2012 drought raised prices to record levels, and coupled with government-backed crop-insurance programs, farmers thrived. Plenty of rain and cooler temperatures in 2013 led to a "record 13.925 billion bushels of corn and the third-largest soybean crop in history." By the end of 2013 corn and soybean prices began to take a dive, with corn prices falling 40 percent, but "Many growers had already locked in the higher prices using futures contracts. With corn prices still hovering around $4.40 a bushel, the real hit is expected this year."

USDA "forecasts a 0.7 percent increase in livestock receipts this year, driven largely by an 11.3 percent drop in feed prices," Newman writes. Dairy farmers are expected to "benefit from an upswing in milk production, dairy prices and robust international demand for U.S. milk." The report also "predicted production expenses for farmers will drop in 2014 for the first time since 2009. But they are still expected to be the second highest level on record nominally and the third highest in inflation-adjusted dollars." (Read more)