Farm earnings are projected to rise more than 10% this year, but nearly a third of producers' net income will come from crop insurance benefits and direct government payments, including the Trump administration's trade assistance.
Net farm income, a broad measure of profits, is expected to rise to $92.5 billion in 2019, a $8.5-billion increase over 2018, USDA's Economic Research Service reported Wednesday. Some 31% of that income will come from government payments and crop insurance benefits, said ERS economist Carrie Litkowski.
Farmers are expected to get $14.3 billion in 2019 from the Market Facilitation Program, which was created last year to compensate farmers for the impact of President Donald Trump's trade wars. MFP will account for more than half of the $22.4 billion in direct government payments estimated for 2019. Last year, government payments totaled $13.7 billion.
Crop insurance indemnities, less premiums, are expected to total $6.5 billion for 2019, the highest level since 2013, reflecting the widespread weather problems this year, said Litkowski.
Another measure of farm profitability, net cash farm income, is forecast to reach $119 billion this year, a 15% increase, or $15.5 billion, from 2018. Net cash farm income includes cash receipts from farming along with farm-related income, including government payments, less cash expenses. It doesn't include non-cash expenses such as depreciation.
The farm economy looks stronger this year when the estimates are limited to commercial farms.
Farms that have an annual gross cash farm income of more than $350,000 and smaller operations where farming is reported as the operator's primary occupation, are expected to average $91,800 in net cash farm income in 2019, a 19.5% increase from 2018. It would be the first annual increase after four consecutive years of declines for those operations.
Those commercial farms, which ERS defines as "farm businesses," account for less than half of total U.S. farms but 90% of total production. They also hold most of the sector's assets and debt.
Commercial farms where corn is the primary crop are projected to have average net cash farm income of $206,400 this year, an increase of 20% from 2018. Earnings for soybean operations are estimated to rise 33.5% to $102,400.
Net cash income for wheat operations is estimated at $134,000 (up 34.8% from 2018), cotton farms are forecast to make $224,400 on average (up 17.9%) and net income for specialty crops is estimated at $203,600 (up 7.8%).
Poultry is the lone major sector that's seeing a decrease in earnings this year. The average income is projected to be $97,200, down from $105,500 last year.
By contrast, dairy producers are expected to see their average net income hit $316,600 this year, a 46.7% increase in 2018. Earnings for commercial pork producers are forecast to hit $308,300, up 23.8% from 2018. Earnings for cattle producers are estimated at $25,400, up from $23,000 in 2018, a 10.4% increase.
The latest forecast of total net farm income for all of U.S. agriculture is $4.5 billion higher than the August estimate of $88 billion, in part due to the second tranche of MFP payments released this month.
The economists raised their estimate for net crop cash receipts by $3.7 billion from August. They are now expected to rise by $1.9 billion, or 1%, from 2018 levels. In August, USDA projected farmers’ crop profits would drop by $3.3 billion, or 1.7%
Net crop cash receipts are estimated to reach $197.4 billion in 2019, which would be the highest level since that reached $212 billion in 2014. Corn receipts are estimated to rise $900 million to $48.7 billion, a 1.9% increase from 2018 because of reduced production and yields this year. But soybean receipts are estimated to fall $1.8 billion, or 4.9% due to declines in prices and volumes sold.
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