Net farm income, a broad measure of profits, is forecast to decrease $9.8 billion (13.0 percent) from 2017 to $65.7 billion in 2018, after increasing $13.9 billion (22.5 percent) in 2017.
Net cash farm income is forecast to decrease $12.4 billion (12.0 percent) to $91.5 billion. In inflation-adjusted 2018 dollars, net farm income is forecast to decline $11.4 billion (14.8 percent) from 2017 after increasing $13.0 billion (20.3 percent) in 2017. If realized, inflation-adjusted net farm income would be just slightly above its level in 2016, which was its lowest level since 2002.
Inflation-adjusted net cash farm income is forecast to decline $14.6 billion (13.8 percent) from 2017 to $91.5 billion, which would be the lowest real-dollar level since 2009. Net cash farm income encompasses cash receipts from farming as well as farm-related income, including government payments, minus cash expenses.
Net farm income is a more comprehensive measure that incorporates noncash items, including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings.
Note: The 2018 forecasts for U.S. farm sector income and finances—including government payments, net farm income, and net cash farm income—do not include payments under the Market Facilitation Program (MFP), announced on July 24, 2018.
Total Crop Receipts Expected Nearly Stable in 2018
Crop cash receipts are forecast to be $197.8 billion in 2018, a decrease of $0.5 billion (0.3 percent) from 2017.
Corn receipts are expected to decline $0.8 billion (1.8 percent) in 2018, reflecting an expected decline in the quantity of corn sold.
Wheat receipts are expected to increase over $0.5 billion (6.3 percent) from 2017 as a predicted decline in quantity sold is more than offset by expected increase in the price of wheat.
Soybean receipts in 2018 are expected to dip slightly ($39.1 million or 0.1 percent) as an anticipated price decline more than offsets higher expected quantities sold. Roughly half of the forecast value for 2018 soybean cash receipts is from 2017/2018 crop marketing year production that was sold prior to China raising import tariffs on U.S. soybeans by 25 percentage points. While prices for soybeans are expected to drop in calendar year 2018, overall soybean production quantities are expected to be up slightly in both the 2017/2018 and 2018/2019 crop marketing years.
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Rice receipts are forecast to decrease $43.3 million (1.8 percent) in 2018, reflecting lower quantities sold.
Cotton receipts in 2018 has an expected slight increase ($79.1 million or 1 percent) reflecting higher upland cotton lint receipts more than offsetting a decline in cottonseed receipts.
Vegetable and melon cash receipts are expected to fall $0.7 billion (3.8 percent) in 2018 despite expected increases in dry bean (4.2 percent) and potato receipts (2.8 percent).
Fruit and nuts receipts are expected to decline almost $0.7 billion (2.2 percent) in 2018.
- Farm sector net farm income in 2018 is expected to decline $9.8 billion (13 percent) from 2017 to $65.7 billion. Farm sector net cash income in 2018 is expected to decline $12.4 billion (12.0 percent), to $91.5 billion. Overall, farm cash receipts are forecast to remain stable at $374.0 billion in 2018. Both total crop receipts and total animal/animal product receipts are expected to be relatively unchanged from 2017 levels.
- Corn cash receipts are forecast down $0.8 billion (1.8 percent) due to lower expected quantities sold, while wheat cash receipts are forecast up $0.5 billion (6.3 percent) due to higher prices
- Milk and hog cash receipts are forecast down $2.8 billion (7.4 percent) and $1.6 billion (7.7 percent) respectively, due to expected lower prices.
- Cash receipts for poultry/eggs are forecast up $5.2 billion (12.1 percent) due largely to expected higher prices.
- Vegetable/melon cash receipts are forecast down $0.7 billion (3.8 percent), due to both lower quantities sold and lower expected prices.
- Direct government farm payments—which include Federal Government farm program payments paid directly to farmers and ranchers but exclude insurance indemnity payments made by FCIC and USDA loans—are forecast to decline $2.0 billion (17.4 percent) to $9.5 billion in 2018, as declines in Agriculture Risk Coverage and Price Loss Coverage payments more than offset an expected increase in supplemental and ad hoc assistance and other programs.
- Federal Crop Insurance Corporation indemnities—payments made by private insurance companies to farm operators for their insured commodity losses—are forecast to rise by $0.9 billion (17.4 percent), to $6.1 billion, in 2018. FCIC premiums paid are expected to decline by $0.2 billion (5.6 percent).
- Total production expenses, including operator dwellings, are forecast to increase $11.8 billion (3.3 percent) in 2018 to $365.9 billion. Expenses for fuels/oils are forecast up $2.3 billion (17.8 percent) and interest expenses, including dwellings, are forecast up $3.2 billion (17.3 percent). Hired labor expenses are forecast to increase $1.5 billion (5.1 percent). Feed is forecast to increase $2.6 billion (4.8 percent).
- Farm sector equity is expected to increase by 0.8 percent to $2.6 trillion in nominal terms. Farm sector assets are forecast to increase 1.2 percent in 2018 to $3 trillion, largely due to a 1.8-percent increase in farm real estate assets. In inflation-adjusted terms, farm sector equity is forecast to drop by 1.2 percent, assets are expected to decline by 0.9 percent and farm real estate assets are forecast to drop by 0.3 percent. Farm sector debt is forecast to rise 3.5 percent to $406.9 billion, with real estate debt forecast to rise 4.4 percent to $248.5 billion. Debt-to-asset levels for the sector are forecast to rise again in 2018, continuing an upward trend since 2012. Total farm sector return on assets in 2018 is expected to be 2.32, the fourth lowest level since 1990 and well above the 1990-2018 average of 7.12.