U.S. farm income is expected to fall 14% in 2014, which is a four year low, as expectations for record corn and soybean crops have pushed commodity prices to their lowest point in many years, the Agriculture Department said this week.
Net farm income is expected to be $113 billion this year, down from $131 billion last year, the USDA said.
"The 2014 forecast would be the lowest since 2010, but would remain $25 billion above the previous 10-year average," the government said in its farm income forecast. "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."
The USDA’s latest forecast marks a sharp upward revision from February’s initial forecast when the federal government predicted farm income to decline by 27% to $95.8 billion, the Des Moines Register reports.
The outlook reflects a stronger increase in the profitability of the livestock sector, where farmers are benefiting from record prices for beef and pork, while feed prices remain cheap. It is a sharp reversal from 2012, when a severe drought caused ranchers to decide to cull herds rather than pay more to feed their animals. The USDA says that cash receipts for livestock owners are expected to swell 15% to $210 billion.
Farmers in the U.S. will harvest record amounts of corn and soybeans this fall as fields throughout much of the Corn Belt got some of the best growing conditions in years, the USDA said earlier this month. It is estimated that 14.03 billion bushels of corn and 3.82 billion bushels of soybeans, both the largest on record, will be produced this season, according to the Des Moines Register.
Farmers in Iowa, the country’s largest corn and second-largest soybean producer, are forecast to harvest 2.44 billion bushels of corn and 502 million bushels of soybeans.
Due to timely rains and relatively mild temperatures in most areas this season, the corn crop is plentiful. This has, however, resulted in prices falling to $3.55 a bushel, the lowest it has been in nearly four years. These prices are down from more than $8 a bushel just two years ago. Soybeans are seeing similar multi-year low prices.
“USDA said crop receipts are expected to decrease $15 billion, or 7% to $201 billion, led by a $13 billion decline in corn,” the Des Moines Register reports.
Farm expenses are forecast to rise 4% to a record $368 billion in 2014, overall. This would be the fifth consecutive annual increase, which is caused by higher costs for seeds, fertilizer and pesticides.