US farm net cash income, bolstered by government payouts, is forecast to rise 15% this year to $119 billion, its highest level in five years. But a Gro Intelligence analysis shows that some states are faring much better than others.
Net cash income comprises cash receipts minus cash expenses, and excludes accounting items such as depreciation. Government payments to farmers are expected to surge to a 15-year high of $22.4 billion. Most of that will be paid out under the Market Facilitation Program (MFP), which targets producers hurt by the US-China trade war.
Excluding the government payouts, net cash income for US farms will be up 8% to $96.6 billion this year. The data estimates were released in the latest Farm Income and Wealth Statistics report, issued three times a year by the USDA Economic Research Service (ERS).
The dairy sector is projected to see the largest gains in revenues in 2019, up 13% to $39.8 billion, on strong demand for cheese and dry milk powders. For big dairy-producing states such as California and Wisconsin, that could push dairy revenues up 13% to $7.2 billion and $5.7 billion, respectively, according to the Gro analysis, which combines the latest national-level forecasts for product sectors with historical state-specific data.
The poultry industry is among the biggest losers. Lower prices for broiler chickens and eggs will push revenues down 14% to $40 billion. The disappointing result will be felt in states such as Georgia and Arkansas, which combined produce a quarter of the country’s broiler chickens. Georgia and Arkansas chicken farmers could see revenues fall 11% this year to $4.1 billion and $3.6 billion, respectively, the Gro analysis showed.
Corn and soybeans are the biggest US crops and have an outsize impact on overall crop receipts. Soybean revenues will drop by 5% to $35.3 billion this year, while corn revenues, boosted by higher prices, will gain 1.9% to $48.7 billion. For Tennessee, where soybeans overshadow corn, that could mean revenues from soybean farming will drop to a seven-year low of $622 million this year. By contrast, corn-dominant Nebraska should see revenues from corn operations rise to a five-year high of $5.6 billion, Gro’s analysis shows.
US farm net cash income (right chart) is forecast to rise to $119 billion in 2019, its highest level in five years, according to USDA estimates. Giving it a boost are government subsidies (left chart), especially payouts meant to compensate farmers because of the US-China trade war.
Nontraditional income is providing a tailwind for the farm economy. Activities such as leasing land for energy development and hedging profit or losses are expected to generate $29.8 billion of revenues, a five-year high and up 21% from the previous year.
Overall farm sector expenses will be little changed from 2018. While animal feed costs are higher this year, fertilizer and seed expenses have declined.
Government support through the MFP program, which paid out $10.2 billion as of Nov. 25, will also vary widely by state. California received just $133 million, or 1%, of the MFP payments, despite producing 13% of the country’s agricultural output. By contrast, farmers in Iowa, which accounts for 8% of total agricultural output, got $1.1 billion, the highest of any state.
While US farm net cash income will be higher this year, farmers’ fortunes will vary widely by product sector and what state they’re in. The chart at left shows that revenues will increase for dairy products (blue bars) but decline for poultry and eggs (green bars). The right chart shows revenues heading in opposite directions for corn (blue bars, moving higher) and soybeans (green bars).