Net Farm Income Forecast to Decrease in 2018

​The US Department of Agriculture (USDA) recently reported its expectations for 2018 net farm income, which included a forecast for a $4.3 billion, or 6.7%, decline to $59.5 billion. At $59.5 billion, this represents the lowest nominal income level since 2006. Similarly, inflation-adjusted, or “real” dollar, net farm income is expected to decline $5.4 billion, or 8.3%, from 2017, which is the lowest real-dollar level since 2002. Net cash farm income, which differs from net farm income by excluding certain non-cash items such as depreciation, is forecasted to decrease $6.7 billion, or 6.8%. 

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Cash receipts for all commodities are expected to fall $2 billion, or 0.5%, to $363.1 billion. A 4.5% increase in soybean receipts will be offset by declines in corn, wheat, cotton, fruits and nuts, and vegetables and melons. Direct government payments to farms are forecast to decline $2.1 billion, or 18.6%, to $9.3 billion in 2018. Total production expenses are expected to increase $3.5 billion, or 1.0%, in nominal terms, to $359.2 billion in 2018. Increases in production expenses are led by fuel, interest, and hired labor, and partially offset by decreases in feed costs.
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Average net cash farm income is expected to experience its fourth consecutive decline to $93,200, which is the lowest average since 2011. Wheat and dairy farms are expected to experience double-digit declines. One area in which net cash farm income is expected to increase is cattle and calf farms, which are expected to experience a 6.2%, or $2,100, increase in average net cash farm income.

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