USDA predicts net farm income will stay under $70 billion for third year in a row; debt and assets are both going up

Net farm income is expected to reach $69.4 billion this year, up $6.3 billion from 2018,
according to the forecast released yesterday by the U.S. Department of Agriculture's Economic Research Service. The ERS releases and updates the forecast three times a year; this is the first such prediction for 2019.

"If accurate, the total would be the third year of net income below $70 billion since 2015," Chuck Abbott reports for Successful Farming. "Farm income in 2019 will be far below the halcyon levels of early this decade, when a seven-year commodity boom propelled income to a record $123.4 billion in 2013 before collapsing due to abundant harvests worldwide."

The figures could signal a new normal, a much lower one, for American farms. Agriculture Secretary Sonny Perdue said last week that expanding global trade and other "trade challenges" (possibly read: the tariff war) will continue to keep commodity prices low in the U.S., Abbott reports.

Despite this, the farm sector is financially sound, some analysts say. "In this, its first forecast of 2019 farm income, the USDA said that higher market prices would mean larger crop and livestock receipts for producers than last year. Livestock production also is expected to rise, helping to generate revenue," Abbott reports. "Production expenses will rise fractionally, and government payments, which hit a 12-year high of $13.8 billion in 2018, are projected to fall by $2.3 billion. Termination of the so-called Trump tariff payments would account for most of the decline in government payments."

Farm debt is increasing, but so are farm assets, as land prices remain strong. The USDA predicts the debt-to-asset ratio will be 13.9 percent this year: still an increase, but "comparatively low," Abbott reports. The next net farm income forecast will be released on Aug. 30.