Source: USDA, 2/7/18

Net farm income, a broad measure of profits, is forecast to decrease $4.3 billion (6.7 percent) to $59.5 billion in 2018, which would be the lowest level in nominal terms since 2006. Net cash farm income is forecast to decrease $5.0 billion (5.1 percent) to $91.9 billion, the lowest level since 2009. In inflation-adjusted (real) 2018 dollars, net farm income is forecast to decline $5.4 billion (8.3 percent) from 2017; if realized, this would be the lowest real-dollar level since 2002. Real net cash farm income is forecast to decline $6.7 billion (6.8 percent) in 2018, and this would be the lowest real-dollar level since 2009. Net cash farm income includes 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.
See a summary of the forecasts in the table U.S. farm sector financial indicators, 2011-2018F, or see all data tables on farm income and wealth statistics.

[In the text below, year-to-year changes in the major aggregate components of farm income are discussed only in nominal dollars unless the direction of the change is reversed when looking at the component in inflation-adjusted dollars.]
Summary Findings
• Overall, farm cash receipts are forecast to decline $2 billion (0.5 percent) in 2018 to $363.1 billion in nominal terms. Both total crop and animal/animal product receipts are forecast to decline by less than 1 percent as declines in receipts from some commodities are largely offset by increases for other commodities.
o Milk cash receipts are forecast down $2.5 billion (6.7 percent) due to expected lower prices, while cattle/calf receipts are forecast up $2.2 billion (3.3 percent) as higher quantities sold are expected to more than offset a decline in prices.
o Corn cash receipts are forecast down $1.9 billion (4.0 percent) primarily due to lower expected prices while soybean receipts are forecast up $1.7 billion (4.5 percent) following expected increases in quantities sold.
o Vegetable/melon cash receipts are forecast down $1.5 billion (7.0 percent), largely due to 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, as well as USDA loans—are forecast to decline $2.1 billion (18.6 percent) to $9.3 billion in 2018, reflecting large expected declines in Agricultural Risk Coverage and Price Loss Coverage payments.
• Federal Crop Insurance Corporation indemnities—payments made by private insurance companies to farm operators for their insured commodity losses—are forecast to rise by $3.8 billion (72.6 percent), to $8.9 billion, in 2018. Premiums paid by farm operators are expected to decline by $92 million (2.4 percent).
• Total production expenses are forecast to increase $3.5 billion (1.0 percent) in 2018 to $359.2 billion. In inflation-adjusted terms, total production expenses are forecast to remain relatively flat (fall 0.8 percent). In nominal terms, expenses for fuels/oils are forecast up $1.4 billion (10.2 percent) and interest expenses are forecast up $1.0 billion (13.8 percent). Hired labor expenses are forecast to increase $787 million (2.5 percent). In contrast, expenses for feed are forecast to fall $715 million (1.3 percent).
• Farm sector equity is expected to increase by 1.6 percent to $2.7 trillion. Farm sector assets are forecast to increase 1.6 percent in 2018 to $3.1 trillion, largely due to a 2.1-percent increase in farm real estate assets. Farm sector debt is forecast to rise 1.0 percent to $388.9 billion, with real estate debt forecast to rise 1.2 percent to $239.0 billion. When adjusted for inflation, farm sector equity, assets and debt are forecast to remain relatively flat (each are forecast to fall less than 1 percent).Debt-to-asset levels for the sector are forecast to fall slightly from 2017.

Value of Agricultural Sector Production Relatively Unchanged in 2018
receipts, adjusted for any changes in the value of inventories and home consumption plus farm-related income. The value of U.S. agricultural sector production is expected to be relatively unchanged from 2017, rising just $1.3 billion (0.3 percent) in 2018 to $409.4 billion in nominal dollars. A $1.4-billion (0.8 percent) decrease in the value of animals/animal products and a $0.5-billion decrease (0.3 percent) in the value of crop production is expected to partially offset a $3.2-billion (6.7 percent) increase in farm-related income (see detail on value of production in the table on value added). However, after adjusting for inflation, U.S. agricultural sector production in real dollars is expected to decline $5.8 billion (1.4 percent).
The forecast decline in the nominal value of crop production from $183.2 billion in 2017 to $182.7 billion in 2018 reflects an expected $1.5-billion drop in cash receipts from the sale of crops, a $1-billion increase in adjusted value of change in crop inventories, and a $500,000 drop in the value of crops consumed on the farm (home consumption).

The forecast decrease in the value of animal/animal product production from $177.4 billion in 2017 to $176.1 billion in 2018 reflects an expected $0.5-billion decrease in cash receipts and a $0.9-billion decrease in the value of inventory adjustment.
Farm-related income is expected to rise by $3.2 billion (6.7 percent) to $50.6 billion in 2018, with nearly all categories forecast to increase. Federal Crop Insurance Corporation (FCIC) indemnities are forecast up almost $3.8 billion (72.6 percent) to $8.9 billion in 2018. The large increase reflects an expected return to typical weather conditions in 2018, with larger expected covered losses, in contrast to the exceptional growing conditions of the previous 2 years. Net cash rent received by operator landlords is the only farm-related income category not expected to increase, declining slightly (1.1 percent).

Total Crop Receipts Expected To Decline in 2018
Crop cash receipts are forecast to be $188.2 billion in 2018, a decrease of $1.5 billion (0.8 percent) from 2017. Corn receipts are expected to decline $1.9 billion (4.0 percent) in 2018, reflecting forecast declines primarily in prices but also quantities sold. Wheat receipts are expected to decline $0.3 billion (3.5 percent) from 2017 as a predicted decline in quantity sold more than offsets an expected increase in the price of wheat. Higher soybean receipts ($1.7 billion or 4.5 percent) are predicted in 2018 as higher expected quantities sold more than offset an anticipated decline in price. Rice receipts are forecast to increase $0.2 billion (9.6 percent) in 2018. The expected decrease ($0.5 billion or 5.9 percent) in 2018 cotton receipts reflects declines in upland cotton lint receipts. Vegetable and melon cash receipts are expected to fall $1.5 billion (7.0 percent) in 2018 despite expected increases in dry bean and potato receipts. Cash receipts for fruits and nuts are expected to decline almost $0.6 billion (2.3 percent) in 2018.

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