Farm income for 2015 expected to be $26 billion less than February USDA projections

The U.S. Department of Agriculture's farm income forecast for 2015 is 53.9 percent lower than record numbers from 2013 and 36 percent less than last year, Harwood D. Schaffer and Daryll E. Ray report for Policy Pennings. In 2013 U.S. farmers earned a record net income of $123.7 billion. That number dropped to $91 billion in 2014, the fourth highest total ever. The 2015 projected income is $58.3 billion, down from $84.2 billion projected in February. (USDA graphic)

The decline is because "income, including insurance payments, from feed grains fell by $6.6 billion, oil crops by $3.6 billion, food grains by $2.4 billion and cotton by $2.1 billion," Schaffer and Ray write. "On the livestock side, dairy receipts fell by $14.3 billion followed by meat animals at 7.8 billion. Expenses only fell by $2.6 billion. Direct government payments were $11.3 billion, only slightly higher than the record income year of 2013. As a result, the value of agricultural production fell by $35.9 billion. Direct government (farm program) payments only increased by $1.6 billion from 2014 and were just $300 million higher than 2013 with its record net farm income."

"When the current farm bill was being written, it was hard to convince most farmers, lobbyists and members of Congress that this kind of scenario could occur," Schaffer and Ray write. "Too many were stubbornly convinced that agriculture was on a new plateau. The USDA Agricultural Baseline Projections to 2022, the baseline that people were looking at when the 2013 to become the 2014 Farm Bill was being written, saw net farm income remaining above $90 billion for a far as the eye could see. As a result, effective countercyclical programs that would protect farmers from extended periods of low prices were not considered. Instead the major concern was to protect farmers from short term price declines, even when prices were well above the cost of production." (Read more)