Farm Sector Profits Expected To Increase in 2019
Net farm income, a broad measure of profits, is forecast to increase $4.0 billion (4.8 percent) to $88.0 billion in 2019, after increasing in both 2017 and 2018. In inflation-adjusted 2019 dollars, net farm income is forecast to increase $2.5 billion (2.9 percent) from 2018. If realized, in inflation-adjusted terms, net farm income in 2019 would be 35.5 percent below its peak of $136.5 billion in 2013 and below its 2000-18 average ($90.1 billion).
Net cash farm income is forecast to increase $7.6 billion (7.3 percent) to $112.6 billion. Inflation-adjusted net cash farm income is forecast to increase $5.8 billion (5.4 percent) from 2018, which would be 4 percent above its 2000-18 average ($108.3 billion). Net cash farm income encompasses cash receipts from farming as well as farm-related income, including government payments, minus cash expenses. It does not include noncash items—including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings—reflected in the net farm income measure above.
Total production expenses (including operator dwelling expenses) are forecast to increase $1.5 billion (0.4 percent) to $346.1 billion (in nominal terms) in 2019. Spending on feed and hired labor is expected to increase while spending on seed, pesticides, fuels/oil, and interest are expected to decline. After adjusting for inflation, total production expenses are forecast to decrease $4.6 billion (1.3 percent).
Farm business average net cash farm income is forecast to increase $8,400 (11.4 percent) to $81,900 per farm in 2019. This would be the first annual increase after 4 consecutive years of declines. Every resource region is forecast to see farm business average net cash farm income increase by 5.6 percent or more. All categories of farm businesses except poultry are expected to see average net farm income rise in 2019.
Farm sector equity is forecast up by $46.1 billion (1.8 percent) in nominal terms to $2.67 trillion in 2019. Farm assets are forecast to increase by $59.8 billion (2.0 percent) to $3.1 trillion in 2019, reflecting an anticipated 1.9-percent rise in farm sector real estate value. When adjusted for inflation, farm sector equity and assets are forecast to be relatively unchanged from 2018. Farm debt in nominal terms is forecast to increase by $13.7 billion (3.4 percent) to $415.7 billion, led by an expected 4.6-percent rise in real estate debt. The farm sector debt-to-asset ratio is expected to rise from 13.31 percent in 2018 to 13.49 percent 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 18.7 percent from 2018.
Median Income of Farm Operator Households Forecast To Increase in 2019
Median farm household income is forecast to reach $74,768 in 2019, an increase of 3.7 percent in nominal terms; in inflation-adjusted terms, it is a 1.9-percent increase. The total median income of U.S. farm households increased steadily over 2010-14, reaching an estimated $81,637 in 2014 (in nominal terms). Median farm household income then fell 6.0 percent in 2015 and continued to decline slightly through 2018. The 2017 and 2018 declines occurred despite an improvement in sector incomes as a whole and sharply higher income for households with commercial farm operations. However, only 10 percent of U.S. farm households operate commercial sized farms. The median farm household is more likely to operate intermediate or small farms, categories where farm-sourced income dropped in 2018 with no appreciable increase expected in 2019.
Farm households typically receive income from both farm and off-farm sources. Median farm income earned by farm households is estimated at -$1,840 in 2018 (nominal terms) and is forecast to increase slightly to -$1,644 in 2019. In recent years, slightly more than half of farm households have had negative farm income. Many of these households rely on off-farm income—and median off-farm income is forecast to increase 2.2 percent from $65,841 in 2018 to $67,314 in 2019. (Because farm and off-farm income are not distributed identically for every farm, median total income will generally not equal the sum of median off-farm and median farm income.)