Net Farm Income Forecast To Fall 26 Percent in 2014Wed, 12 Feb 2014 04:15:14 CST
USDA’s Economic Research Service (ERS) issued their “2014 Farm Sector Income Forecast,” which shows a significant downturn in net farm income on a national level. “Net farm income is forecast to be $95.8 billion in 2014, down 26.6 percent from 2013’s forecast of $130.5 billion. The 2014 forecast would be the lowest since 2010, but would remain $8 billion above the previous 10-year average.”
“The value of crop production is expected to decline substantially in 2014, falling back to pre-2011 levels. Commensurate with this drop is an expected decline in both crop cash receipts and the value of crop inventory adjustment,” the ERS update said; adding that, “Large U.S. corn production increases are expected as U.S. farm operations continue bouncing back from the 2012 drought. Both sales receipts and value of inventory change for corn in 2014 are expected to decline significantly, reflecting a large forecast decline in the average price of corn for grain. The world corn market has become much more competitive.”
ERS noted that, “Soybean receipts and value of production are expected to decline significantly, reflecting a large expected decline (19.3 percent) in the annual price”
On the livestock side, yesterday’s update stated that, “Increased dairy receipts are expected to more than offset forecast declines in hog and egg receipts in 2014. In addition, receipts for cattle and receipts for calves are expected to remain stable in 2014 as price gains offset a decline in beef and veal production."
On hte expense side of the ledger, ERS noted that, “Production expenses in 2014 are expected to drop for the first time since 2009. However, their forecast $3.9-billion decrease from the revised 2013 forecast of production expenses is considerably less than 2009’s $11.0-billion drop. They remain well above nominal 2012 production expenses, and are expected to be the second highest on record nominally and the third highest in inflation-adjusted dollars”
On the issue of government payments, ERS explained that, “Government payments paid directly to producers are expected to total $6.12 billion in 2014, representing a 45.4-percent decrease from 2013 (see table on government payments). Under the provisions of the Agricultural Act of 2014, cotton producers are eligible to receive fixed transition payments for crop years 2014 and 2015 as they transition into coverage authorized by the new Stacked Income Protection Plan (STAX). Fixed by legislation, these cotton transition payments are forecast to be $577 million in 2014.
“Based on 2013 crop-year revenue losses mostly for corn, farmers are currently expected to receive $190 million in Average Crop Revenue Election (ACRE) revenue payments in 2014. Producers will receive the first payments from the newly authorized Price Loss Coverage Program and Average Risk Coverage Program in calendar-year 2015.”
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