Texas Agriculture September 16, 2016 : Page 8

Net cash farm income for 2016: $94.1 billion Down 13.3 percent over 2015 Net farm income for 2016: $71.5 billion Down 11.5 percent Cash receipts: Down $25.7 billion Overall production expenses: Down 2.8 percent Direct government farm program payments: Up $2.7 billion to $13.5 billion USDA alters farm income estimates By Jessica Domel News Editor A new report from the U.S. Depart-ment of Agriculture (USDA) on farm income offers a small bit of encourag-ing news for American farmers. Farm income is still forecast to be down, but perhaps not as low as origi-nally anticipated. Other costs are also on the decline. “In August 2016, net cash income was up a little shy of $4 billion from where they were in February, com-ing in at $94 billion,” Bob Young, chief economist for American Farm Bureau Federation, said. “That’s still a drop of about $12 billion or so from where we were in 2015. They thought we were at $108 billion in 2015 down to $94 billion in 2016. Income is down, but maybe not as hard as it was in the February forecast.” If realized at $94.1 billion, net cash income, which does not include inven-tory adjustment, non-cash income or depreciation, will be down 13.3 per-cent over last year. That’s been revised upward of $15.3 billion, compared to February estimates. Net farm income, which includes what is left out of net cash income as well as family living, is forecast at $71.5 billion for the year. That’s down 11.5 percent from 2015, but was adjusted up $24.3 bil-lion. If the August forecast is correct, net farm income would be the lowest since 2009, according to the report. “We’ve seen a noticeable decline in crop income,” Young said. “I don’t think that comes as any shock or sur-prise to folks. Crop income is down. Livestock income is actually down a little harder than the crop side was.” Cash receipts are forecast to fall $25.7 billion, or 6.8 percent, to $353 billion this year. That’s led by an $18.7 billion drop in animal/animal product receipts and a $7.1 billion, or 3.7 percent, drop in crop receipts, according to the re-port. Nearly all major animal and prod-uct categories are forecast to drop with the exception of receipts for turkeys, rye, hay, cotton, potatoes, sugarcane and sugar beets and miscellaneous oil crops. Those are expected to rise by at least one percent this year. “The big story in the numbers is what they’ve got going on the cost side. Surprisingly enough, they actu-ally had cost down and down pretty hard when it got right down to it,” Young said. Overall production expenses went down about $27 billion from the Feb-ruary numbers. “They had some surveys that came in since the February numbers,” Young said. “Some of those surveys were last conducted in 1999. It proba-bly shouldn’t surprise you those num-bers were going to change quite a bit.” Some of the biggest cost adjust-ments this year were seen in rental costs to operator and non-operator landlords. “The February estimate suggested a slight rise in net rent to landlords in 2016, compared to the 2015 value. The August value suggests rents have declined, continuing the trend that started in 2013,” Young said. “In fact, the new 2016 figures suggest net rent is down $3.2 billion from 2013 figures.” Fertilizer and electricity costs were also lower than originally anticipat-ed—to the tune of about $1.3 billion between the two forecasts. “That makes sense with what we know is going on in terms of what we’re putting down, but also what we’re paying for it,” Young said. Feed costs are estimated to be about $2.2 billion higher than origi-nally projected. “I think farmers are taking a little bit closer look,” Young said. “Interest costs, too, were down quite a bit, but I think that was because in February they thought interest rates were go-ing to go up. They haven’t yet.” Lower interest rates are helping farmers save a significant amount of cash. The value of total farm sector eq-uity is forecast down by $61.2 billion, or 2.4 percent, this year. The decline in farm sector assets outpaced the mod-est decline in sector debt, according to the report. The value of real estate is forecast down by 1.5 percent, or $36.9 billion. “Farm income is going to be lower in 2016 than it was in 2015. We knew that,” Young said. “What this report does suggest is that there are adjust-ments underway on the cost side that make good sense in our current envi-ronment.” Direct government farm program payments are expected to rise about $2.7 billion to $13.5 billion in 2016. USDA will update the farm income report again in November. 8 S EPTEMBER 16 , 2016

USDA Alters Farm Income Estimates

Jessica Domel

A new report from the U.S. Department of Agriculture (USDA) on farm income offers a small bit of encouraging news for American farmers.

Farm income is still forecast to be down, but perhaps not as low as originally anticipated. Other costs are also on the decline.

“In August 2016, net cash income was up a little shy of $4 billion from where they were in February, coming in at $94 billion,” Bob Young, chief economist for American Farm Bureau Federation, said. “That’s still a drop of about $12 billion or so from where we were in 2015. They thought we were at $108 billion in 2015 down to $94 billion in 2016. Income is down, but maybe not as hard as it was in the February forecast.”

If realized at $94.1 billion, net cash income, which does not include inventory adjustment, non-cash income or depreciation, will be down 13.3 percent over last year.

That’s been revised upward of $15.3 billion, compared to February estimates.

Net farm income, which includes what is left out of net cash income as well as family living, is forecast at $71.5 billion for the year.

That’s down 11.5 percent from 2015, but was adjusted up $24.3 billion.

If the August forecast is correct, net farm income would be the lowest since 2009, according to the report.

“We’ve seen a noticeable decline in crop income,” Young said. “I don’t think that comes as any shock or surprise to folks. Crop income is down. Livestock income is actually down a little harder than the crop side was.”

Cash receipts are forecast to fall $25.7 billion, or 6.8 percent, to $353 billion this year.

That’s led by an $18.7 billion drop in animal/animal product receipts and a $7.1 billion, or 3.7 percent, drop in crop receipts, according to the report.

Nearly all major animal and product categories are forecast to drop with the exception of receipts for turkeys, rye, hay, cotton, potatoes, sugarcane and sugar beets and miscellaneous oil crops. Those are expected to rise by at least one percent this year.

“The big story in the numbers is what they’ve got going on the cost side. Surprisingly enough, they actually had cost down and down pretty hard when it got right down to it,” Young said.

Overall production expenses went down about $27 billion from the February numbers.

“They had some surveys that came in since the February numbers,” Young said. “Some of those surveys were last conducted in 1999. It probably shouldn’t surprise you those numbers were going to change quite a bit.”

Some of the biggest cost adjustments this year were seen in rental costs to operator and non-operator landlords.

“The February estimate suggested a slight rise in net rent to landlords in 2016, compared to the 2015 value. The August value suggests rents have declined, continuing the trend that started in 2013,” Young said. “In fact, the new 2016 figures suggest net rent is down $3.2 billion from 2013 figures.”

Fertilizer and electricity costs were also lower than originally anticipated—to the tune of about $1.3 billion between the two forecasts.

“That makes sense with what we know is going on in terms of what we’re putting down, but also what we’re paying for it,” Young said.

Feed costs are estimated to be about $2.2 billion higher than originally projected.

“I think farmers are taking a little bit closer look,” Young said. “Interest costs, too, were down quite a bit, but I think that was because in February they thought interest rates were going to go up. They haven’t yet.”

Lower interest rates are helping farmers save a significant amount of cash.

The value of total farm sector equity is forecast down by $61.2 billion, or 2.4 percent, this year. The decline in farm sector assets outpaced the modest decline in sector debt, according to the report.

The value of real estate is forecast down by 1.5 percent, or $36.9 billion.

“Farm income is going to be lower in 2016 than it was in 2015. We knew that,” Young said. “What this report does suggest is that there are adjustments underway on the cost side that make good sense in our current environment.”

Direct government farm program payments are expected to rise about $2.7 billion to $13.5 billion in 2016.

USDA will update the farm income report again in November.

Net cash farm income for 2016: $94.1 billion

Down 13.3 percent over 2015

Net farm income for 2016: $71.5 billion

Down 11.5 percent

Cash receipts: Down $25.7 billion

Overall production expenses: Down 2.8 percent

Direct government farm program payments: Up $2.7 billion to $13.5 billion

Read the full article at http://texasagriculture.texasfarmbureau.org/article/USDA+Alters+Farm+Income+Estimates/2583146/337550/article.html.

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