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Outlook for the
2015 U.S. Farm Economy
Kevin Patrick
Farm Economy Branch
Resource and Rural Economics Division
Overview
Net farm income in 2015 forecast: $73.6
billion
Down more than 32% from 2014
Net cash income in 2015 forecast: $89.4
billion
Down over 20% from 2014
Crop and livestock receipts are forecast down over 5 percent
Government payments expected to increase by 15 percent
2015 Forecast
2015 farm income is forecast based on the 2014 forecast
In the next forecast (August 2015), 2014 will become an estimate
The February 2015 forecast is based on the most recent forecasts of
•
•
•
•
Commodity demand
Crop and livestock inventories
Acres planted, yields, and production
Input use and costs
AND is different from the USDA long-term projections that we formulated in December 2014
Factors that will influence 2015 outcomes
•
•
•
Actual planting decisions
Weather (during planting, growing, and harvesting)
Timing of sales
Crop and livestock receipt forecasts driving major
changes to net farm income from 2014F to 2015F
$108.0
$ billion
-$15.6
-$10.1
$73.6
$1.6
$0.7
-$8.2
-$0.2
-$2.5
2014F-2015F change
-$34.4 billion
Net farm
income
2014F
Crop receipts Change in
crop
inventory
Livestock
receipts
Change in
livestock
inventory
Production Government
Expenses
Payments
All other
changes
Net farm
income
2015F
Source: Economic Research Service, USDA.
F= forecast.
Income measures return to long-run trend levels
Inflation-adjusted net farm income and net cash income, 1970-2015F1/
$ billion
140
120
Net cash income
100
80
60
40
Net farm income
20
0
1970
1975
1980
Net cash income $89.4
2015 Net farm income $73.6
1985
1990
1995
2000
2005
2010
2015F
1/ The
GDP chain-type price index is used
to convert the current-dollar statistics to real
(inflation adjusted) amounts (2009=100).
Source: Economic Research Service, USDA.
F= forecast.
Crop receipts are forecast to decline for all major categories in 2015
Receipts for selected crops, 2011-2015F
$ billion
80
70
2011
2012
2013
2014F
2015F
60
50
40
30
20
10
0
Corn
Oil crops
Fruits and tree nuts
Vegetables and
melons
Wheat
Cotton
Source: USDA, ERS
Note: 2014, 2015 forecasts
Total livestock receipts are forecast down 5 percent in 2015
Receipts for selected livestock products, 2011-2015F
$ billion
100
2011
90
2012
2013
2014F
2015F
80
70
60
50
40
30
20
10
0
Cattle and calves
Dairy
Broilers
Hogs
Source: USDA, ERS
Note: 2014, 2015 forecasts
Real cash expenses expected to decline for the first time since
2009
$ billion(2009)
Inflation-adjusted1/ cash expenses, 1970-2015F
300
Trend:
1970-1979
5.1% per yr.
250
Trend:
2003-2014F
4.7% per yr.
200
Cash expenses
150
100
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015F
1/ The GDP chain-type price index is used to convert current-dollar amounts to real (inflation adjusted) amounts (2009 = 100).
Source: USDA, ERS
Note: 2014, 2015 forecasts
Fuel forecast down 26.7 percent; Production expenses up $2.5 billion
Changes in expense items, 2014F - 2015F
-2.7%
$ billion
60
50
4.1%
10.6%
4.1%
40
30
-26.7%
0.8%
-3.2%
6.2%
5.0%
2.1%
20
10
0
Fuels
Pesticides
Rent
Interest
Repairs
Seed
Fertilizer
Livestock &
poultry
Labor
Feed
2014F
2015F
Note: Percent change from 2014 to 2015 is indicated at the top of each set of bars.
Source: USDA, ERS
Note: 2014, 2015 forecasts
$ billion
30
Government payments to farm producers, 2005-2015F
All other payments 3/
25
Function of crop price payments 2/
Conservation payments
20
Fixed payments 1/
15
10
5
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014F
2015F
F= Forecast.
1/ Direct payments are through 2013 and cotton transition payments in 201 3. Cotton transition payments begin in 2014.Payment
rates are fixed by legislation.
2/ Counter-cyclical payments, average crop revenue election (ACRE) payments, loan deficiency payments, marketing loan gains,
certificate exchange gains. Price Loss Coverage(PLC) , and Agricultural Risk Coverage (ARC ) in which commodity payment rates vary
with market prices. The certificate exchange program ended after making payments for the 2009 crop year.
3/ All other payments include disaster relief payments, tobacco transition payments, and dairy program payments.
Source: FSA, NRCS, and CCC.
Data as of February 10, 2015
Source: FSA, NRCS, and CCC
Note: 2014, 2015 forecasts
Inflation-adjusted assets and equity values expected to decline for
first time since 2009
Inflation-adjusted farm sector assets, debt and equity, 1970-2015F
$ trillion
3
2.5
2
1.5
1
0.5
0
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015F
Debt
Note: GDP chain-type price index is used to convert current-dollar amounts to real (inflation adjusted)
amounts (2009 = 100).
Source: Economic Research Service, USDA
F = forecast
Debt
Assets
Equity
1/ The GDP chain-type price index is used to convert current-dollar amounts to real (inflation adjusted) amounts (2009 = 100).
Source: USDA, ERS
Note: 2014, 2015 forecasts
Percent
Debt to asset and debt to equity ratios forecast to
increase for first time since 2009
Farm debt ratios, 1970 - 2015F
30
25
20
15
12.23
10
10.90
5
0
1970
1975
1980
1985
Debt to asset ratio
1990
1995
2000
2005
2010
2015F
Debt to equity ratio
Source: USDA, ERS
Note: 2014, 2015 forecasts
Farm businesses represent over 930,000 farms and account for over
Percent
90 percent of production
100
90
80
70
60
50
1,160,000
935,000
40
30
20
10
0
Farms
Production
Assets
Debt
Farm Businesses
Residence
Intermediate
Commercial
operators report they are
retired or have a major
occupation other than
farming.
Gross cash farm income
less than $350,000 and
operators report farming as
their major occupation.
Gross cash farm income
greater than $350,000 and
farms organized as nonfamily
corporations or cooperatives.
Source: 2013 Agricultural Resource
Management Survey (ARMS)
Lower average net cash income is forecast for farm
businesses that specialize in crop production in 2015
$ thousand
Average net cash income for crop farm businesses1/
300
2011
2012
2013
2014F
2015F
250
200
150
100
50
0
Cotton and rice
Specialty crops
Corn
Mixed grain
Soybeans and
peanuts
Wheat
1/ The farm level forecasts are derived from partial budget modeling on the 2013 Agricultural Resource Management Survey (ARMS) using parameters from the sector forecasts. The model is static
and therefore does not account for changes in crop rotation, weather, and other local production impacts that occurred after the base year
F = forecast
Source: USDA, ARMS
Note: 2014, 2015 forecasts
2015 forecasts down for all farm businesses
specializing in livestock and poultry production
Average net cash income for livestock farm businesses
$ thousand
500
450
400
2011
2012
2013
2014F
2015F
350
300
250
200
150
100
50
0
Hogs
Dairy
Poultry
Beef cattle
1/ The farm level forecasts are derived from partial budget modeling on the 2010 Agricultural Resource Management Survey (ARMS) using
parameters from the sector forecasts. The model is static and therefore does not account for changes in crop rotation, weather, and other local
production impacts that occurred after the base year.
Source: USDA, ERS
Note: 2014, 2015 forecasts
Average net cash incomes are forecast down for farm businesses
in all regions in 2015 relative to 2014
Northern Crescent
-34%
Northern
Great Plains
-12%
Fruitful Rim
-27%
Basin and Range
-22%
Heartland
-21%
Eastern
Uplands
-5%
Prairie
Gateway
-25%
Fruitful Rim
-27%
Southern
Seaboard
-17%
Mississippi Portal
-12%
Fruitful Rim
-27%
Source: ERS partial model based using the 2013
Agricultural Resource Management Survey (ARMS) and
parameters from the sector forecasts. The model is static
and therefore does not account for changes in crop
rotation, weather, and other local production impacts that
occurred after the base year.
Crop and livestock receipt forecasts driving major
changes to net farm income from 2014F to 2015F
$ billion
$108.0
-$15.6
-$10.1
$73.6
$1.6
$0.7
-$8.2
-$0.2
-$2.5
2014F-2015F change
-$34.4 billion
Net farm
income
2014F
Crop receipts Change in
crop
inventory
Livestock
receipts
Change in
livestock
inventory
Production Government
Expenses
Payments
All other
changes
Net farm
income
2015F
Source: Economic Research Service, USDA.
F= forecast.
Questions?
Check out our website:
http://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances
Contact me:
[email protected]