Farm Income Forecast Shows Disparity Between Sectors
Bernt Nelson
Economist
photo credit: AFBF Photo, Dylan Davidson
Bernt Nelson
Economist
New projections from the Department of Agriculture predict farm income to increase in 2025. Mike Davis has a closer look.
Davis: The latest Net Farm Income Forecast from USDA’s Economic Research Service predicts farm income to increase in 2025. However, Bernt Nelson, an economist for the American Farm Bureau Federation, says it’s important to look at the data beyond just the top-line numbers.
Nelson: Net farm income is forecast at $179.8 billion for this year. This is an increase of 52 billion, or about 41% from last year. Most of this increase comes from government payments, which are forecast to be 40 and a half billion dollars of that total of 179 billion. This is an increase of about 300% from where it was last year.
Davis: Nelson says the report paints a picture of two very different farm economies.
Nelson: Cash receipts from crop sales are forecast to fall by two and a half percent to 236.6 billion, in addition to USDA adjusting February's earlier estimate for crop receipts down by 17 billion. So if this were realized, this would be the lowest since 2007. On the other side of this, receipts for animals and animal products are forecast to increase by 11% to just shy of $300 billion. Most of this is from higher prices for cattle and eggs. This would be record high for this category.
Davis: One of the highlights of the report to Nelson was farm debt, and the interest paid on that debt.
Nelson: Total farm sector debt is forecast to increase by 28.3 billion to $591.8 billion in 2025. This is an increase of almost 20% since 2022 when the Fed started raising their interest rates to combat inflation. Interest paid to service that debt is forecast to rise by $1.6 billion this year. Now, this lays out just how fragile the farm financial situation really is right now.
Davis: I'm Mike Davis, Washington.
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