Farmers will likely see a drop in profit for the third straight year, according to the U.S. Department of Agriculture’s Economic Research Service (USDA ERS).
The agency forecasts another decline as surpluses continue to depress crop and livestock prices.
Net farm income is projected to drop 3 percent to $54.8 billion, and net cash income is forecast down 2.5 percent to $90.9 billion.
“Overall, net farm income for all producers is forecast down slightly, 3 percent, relative to 2015. This is an improvement from the double digit declines seen in 2014 and 2015, and it reflects a more competitive trade environment, softening projection for global demand and a continuation of the dip in agricultural commodity prices. While agricultural exports climbed more than 45 percent in value, totaling $911.4 billion over the past 5 years and besting all previous records in terms of value and volume and acting as an engine for America’s farm economy, today’s forecast shows how weaker foreign demand can weigh on farm income,” USDA Agriculture Secretary Tom Vilsack said in a statement.
Government payments are expected to increase 31.4 percent to $13.9 billion. Much of that increase comes from Agricultural Risk Coverage and Price Loss Coverage farm bill programs.
Cash crop receipts are also expected to experience a slight 0.9 percent drop, much smaller than the animal and animal products cash receipts that are expected to be down by 4.3 percent.
A slight silver lining in the figures is the projected 1 percent drop in total production expenses, which would be down for the second year in a row.