Falling corn and soybean prices will result in a decline in net farm income in 2014, the U.S. Department of Agriculture said in a forecast report issued Tuesday.
Net farm income in the U.S. is forecast to be $113.2 billion in 2014, down about 14 percent from 2013's forecast of $131.3 billion.
The 2014 forecast would be the lowest since 2010, but would remain $25 billion above the previous 10-year average, the USDA said in the report.
"Lower cash receipts for crops and, to a lesser degree, higher production expenses and reduced government farm payments, drive the expected drop in net farm income," according to the report.
Crop receipts are expected to decrease more than 7 percent in 2014, led by a projected $12.8 billion decline in corn receipts and a $6 billion decline in soybean receipts.
Livestock receipts are forecast to increase by more than 15 percent in 2014 largely due to higher prices.
Meanwhile, the elimination of direct payments under the Agricultural Act of 2014 results in a projected 15 percent decline in government payments.
Overall, the USDA said the rate of growth in farm assets, debt and equity is forecast to slow in 2014 compared to recent years. “The slowdown is a result of expected lower net income, higher borrowing costs, and moderation in the growth of farmland values,” according to the report.
The USDA says the value of farm assets is expected to rise 2.3 percent in 2014, while farm sector debt is expected to increase 2.7 percent. "This represents a noticeable reduction in the average annual growth in each of these measures compared with the last 10 years," according to the report. "Nonetheless, the historically low levels of debt relative to assets and equity reaffirm the sector's strong financial position."
Source: Milwaukee Journal Sentinel