Source: USDA ECONOMIC RESEARCH SERVICE, 11/24/15

Both net cash and net farm income are forecast to decline for the second consecutive year after reaching recent highs in 2013. Net cash income is expected to fall by 27.7 percent in 2015, while the forecast 38.2-percent drop in net farm income would be the largest single-year decline since 1983 (in both nominal and inflation-adjusted terms).

Highlights
• Both net cash and net farm income are forecast to decline for the second consecutive year after reaching recent highs in 2013. Net cash income is expected to fall by 27.7 percent in 2015, while the forecast 38.2-percent drop in net farm income would be the largest single-year decline since 1983 (in both nominal and inflation-adjusted terms).
• Crop receipts are expected to decrease by 8.7 percent ($18.2 billion) in 2015, led by a forecast $8.6-billion decline in corn receipts, a $5.7-billion drop in soybean receipts, and a $2.7-billion drop in wheat receipts.
• Livestock receipts could fall by 12.0 percent ($25.4 billion) in 2015, a reversal from the 43.8-percent increase in receipts over 2005-14 period.
• The reduction in crop and livestock receipts is largely driven by changes in price rather than changes in output.
• Government payments are projected to rise 10.4 percent ($1.0 billion) to $10.8 billion in 2015.
• Total production expenses are forecast to fall 2.3 percent, the first time since 2009 that they have fallen year over year. Energy inputs and feed are expected to have the largest declines. Expenses are forecast to increase for labor, interest, and property taxes.
• After several years of steady improvement, farm financial risk indicators such as the debt-to-asset ratio are expected to rise in 2015, indicating increasing financial pressure on the sector. However, debt-to-asset and debt-to-equity ratios remain low relative to historical levels.
• Declining farm sector assets resulting from a modest decline the in value of farmland, investments, and other financial assets—as well as higher debt—are forecast to erode equity by 4.8 percent, the first drop since 2009.
• After several years of steady improvement, farm financial risk indicators such as the debt-to-asset ratio are expected to rise in 2015, indicating greater financial pressure on the sector. However, the sector appears to have remained well insulated from solvency risk.

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