U.S. farm income expected to fall 38 percent

Net farm income in the United States is forecast to plummet 38 percent to $55.9 billion this year from $90.4 billion in 2014, the largest one-year decline since 1983, according to the U.S. Department of Agriculture.

If realized, the 2015 forecast for net farm income would be the lowest since 2002 and a drop of 55 percent from the recent high of $123.3 billion in 2013. The agency's Economic Research Service (ERS) on Tuesday cited lower crop and livestock receipts as the main drivers of the decline.

'Crop receipts are expected to decrease by $18.2 billion, or 8.7 percent, in 2015 led by projected declines of $8.6 billion in corn receipts, $5.7 billion in soybean receipts, and $2.7 billion in wheat receipts,” said Jeff Hopkins, ERS economist, on a conference call. 'Livestock receipts are forecast to decrease by $25.4 billion, or 12 percent, in 2015.”

Hoskins said the primary reason for lower livestock receipts is lower prices for milk, hogs, broilers, and cattle and calves. Cash receipts increased by 43.8 percent from 2005 to 2014, but are expected to fall 12 percent in 2015 to $186.8 billion.

Most of the decline is due to falling dairy and hog receipts. Hog prices are expected to drop sharply relative to 2014 and result in a 25 percent decline in hog cash receipts.

Hoskins said production expenses are forecast to fall 2.3 percent in 2015, the first time since 2009 that they have fallen year over year. While the cost of energy and feed are projected to be lower, expenses are forecast to rise for labor, interest, and property taxes.

At the farm household level, Hoskins said median income has increased steadily over the past five years, peaking at an estimated $80,620 in 2014. He said the median income is forecast to decrease slightly in 2015 to $78,284.

Don Roose at U.S. Commodities in West Des Moines said agriculture is moving through a down cycle.

'We had strong demand, a weak dollar and new demand for biodiesel and ethanol, which gave us a boost along with buying from China and other countries trying to improve their overall diet,” Roose said. 'The dollar has firmed up, which makes it hard to compete in world markets, and there's no new demand and growth story.”