Despite $12 Billion in Government Subsidies, Farm Income Forecast to Plunge 32%
Mostly because of lower commodity and livestock prices, net farm income for U.S. farmers is projected to fall 32% this year to $73.6 billion—its lowest level in six years. American taxpayers are riding to the rescue, however, making up a significant chunk of the decline.
A report (pdf) from the Congressional Research Service showed that the federal government is expected to pay out $12.4 billion in subsidies to farmers that will represent about 17% of net farm income. Half that total will be paid out via Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) programs designed to cushion agricultural losses. These programs replaced the direct payment system that was in effect until the 2014 farm bill went into effect.
The decline in net farm income, which was $108 billion in 2014, is chiefly due to a drop in prices for feed grains such as corn, sorghum, barley, and oats and other products, including soybeans. Dairy, poultry and pork prices have also fallen, although beef prices have remained high.
Another factor expected to depress agricultural income is a drop in exports. The report said that they’ll be down 6% from 2014’s record $152.5 billion.
While net income is down, farm wealth remains high. Farm asset values are expected to increase by 0.4% to a record $3.005 trillion in the United States.
“Declining prices for most major program crops signal tougher times ahead, and considerable uncertainty surrounds producer participation in the new safety net programs of the 2014 farm bill. Eventual 2015 agricultural economic well-being will hinge greatly on the crop choices made this spring, growing conditions during the spring and summer, and harvest-time prices, as well as both domestic and international macroeconomic factors, including economic growth and consumer demand,” according to the report.
To Learn More:
U.S. Farm Income Outlook for 2015 (by Randy Schnepf, Congressional Research Service) (pdf)
$11 Million in Farm Subsidies Paid to 50 Billionaires, as Food Stamp Program is Cut by $5 Billion (by Noel Brinkerhoff, AllGov)
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