USDA Sees Income Gain but Decline in Working Capital

Posted on 12/03/2019 1:05 PM

Net farm income is forecast to increase $8.5 billion (10.2%) to $92.5 billion in 2019, according to the most recent update from USDA's Economic Research Service. The gain follows increases in both 2017 and 2018.

inflation-adjusted 2019 dollars, net farm income is forecast to increase $7.0 billion (8.2%) from 2018, USDA notes. If realized, in inflation-adjusted terms, net farm income in 2019 would be 32.3% below its peak of $136.6 billion in 2013 but 2.8% above its 2000-18 average of $90.1 billion.

Net cash farm income is forecast to increase $15.5 billion (15.0%) to $119.0 billion, USDA states. Inflation-adjusted net cash farm income is forecast to increase $13.6 billion (12.9%) from 2018, and would be 10.0% above its 2000-18 average ($108.2 billion). 

USDA Net Farm Income and Net Cash Farm Income

Cash receipts for all commodities are forecast to increase $2.2 billion (0.6%) to $374.2 billion (in nominal terms) in 2019. Total animal/animal product receipts are expected to be largely unchanged as increases in milk and hog receipts are expected to be nearly offset by declines in poultry/eggs receipts. Total crop receipts are expected to increase $1.9 billion (1.0%) in nominal terms from 2018.

Direct government farm payments are forecast to increase $8.8 billion (64.0%) to $22.4 billion in 2019 (in nominal terms), with the increase due to higher anticipated payments from the Market Facilitation Program, USDA reports.

USDA projected income sources

Farm sector equity is forecast to rise by $56.5 billion (2.2%) in nominal terms to $2.68 trillion in 2019. Farm assets are forecast to increase by $70.0 billion (2.3%) to $3.10 trillion in 2019, reflecting an anticipated 2.1% rise in farm sector real estate value. When adjusted for inflation, farm sector equity and assets are forecast to be relatively unchanged from 2018.

USDA Farm business assets

Farm debt in nominal terms is forecast to increase by $13.5 billion (3.4%) to $415.5 billion, led by an expected 4.6% rise in real estate debt. The farm sector debt-to-asset ratio is expected to rise from 13.28% in 2018 to 13.42% in 2019. Working capital, which measures the amount of cash available to fund operating expenses after paying off debt due within 12 months, is forecast to decline 12.5% from 2018.

USDA projected solvency ratios

 

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