Net farm income is forecast to be $95.8 billion in 2014, down 26.6% from 2013's forecast of $130.5 billion, the USDA Economic Research Service said Tuesday.
The 2014 forecast would be the lowest since 2010, but would remain $8 billion above the previous 10-year average, USDA says. Contributors to the decline include lower crop cash receipts, and, to a lesser degree, a change in the value of crop inventories and reduced government farm payments.
Lower crop receipts, higher livestock receipts
USDA estimates that crop receipts will decrease more than 12% in 2014, led by a projected $11 billion decline in corn receipts and a $6 billion decline in soybean receipts.
Chief Economist Joe Glauber notes that the projected total value of crop receipts will be $189 billion, down almost $27 billion from 2013.
Livestock receipts, however, are forecast to increase in 2014 largely due to higher milk prices. Pork producers, too, will see a slight increase, USDA says, but the Porcine Epidemic Diarrhea virus remains a source of uncertainty.
"Livestock receipts are up marginally," noted Glauber, "at 183.4 billion. It's the first time in a long time long while that we have seen livestock and crop receipts at around the same magnitude."
The elimination of direct payments under the farm bill, now law, and uncertainty regarding enrollment and payments during 2014 result in a projected 45% decline in government payments, USDA says.
On the other hand, total production expenses are forecast to decline $3.9 billion in 2014, which would be only the second time expenses declined in the last 10 years. That would make total expenses $310 billion, down almost $5 billion from last year, Glauber says.
The rate of growth in farm assets, debt and equity is forecast to slow in 2014 compared to recent years. The slowdown in growth is a result of expected lower net income, higher borrowing costs, and moderation in the growth of farmland values.