As 2019 begins, and those lists of the top 10 movies or top 10 television shows have been tossed onto the recycling pile, it’s time to look at 2018 year-end farm outlook reviews – and what to expect in 2019.
The American Farm Bureau Federation (AFBF), an independent, non-governmental, voluntary organization which bills itself as “local, county, state, national and international in its scope and influence and non-partisan, non-sectarian and non-secret in character,” recently released its “Updated End-of-Year Farm Economic Outlook,” by John Newton, Ph.D., the AFBF’s Chief Economist.
The news for 2018 is sobering, indicating that the farm economy continues to struggle. Net farm income in 2018 is down 12% from prior-year levels – about the third-lowest level in more than 20 years after adjusting for inflation.
The author starts with a review of cash receipts, which are flat. Gross agricultural cash receipts in 2018 are projected at $423 billion, up 1.5%, or $6.3 billion, from prior-year levels; but when adjusted for inflation, gross cash receipts are down 0.8%, $22 billion below the 10-year average and nearly $80 billion less than the record-setting 2014 total of $501 billion.
Then there’s the high total 2018 agricultural-related expenses, which are projected at $369.1 billion. If that plays out as expected, expenses would be up 4.2% from prior-year levels – the highest level since 2014.
One final factor to throw in is that net farm income in 2018, which is higher than originally projected by USDA, has been greatly affected by including ad hoc disaster and trade-related payments to farmers and ranchers. If we exclude these payments, net farm income in 2018 is projected at $64.7 billion, down $10 billion (or 13%) from prior-year levels. That makes it the third lowest level over the last decade, behind 2009 and 2016.
Fortunately, while the outlook for 2019 is still uncertain, there are some bright spots to look out for. First on this list are the positive effects of the farm bill, which should give farmers and ranchers more risk management certainty. Also, many are seeing that trade relationships are moving towards normalizing, based on the administration’s desire to restore and improve access in key export markets.
Combining these positives with much-needed regulatory relief and tax season reform gives U.S. farmers and ranchers what they need to compete in the marketplace and move U.S. farms into increased profitability.
Fairbanks is kicking off the year by participating in three agricultural shows, and we would love to talk with you about how we can help with that move towards profitability. Find us at the Iowa Farming Power (January 29-31, 2019); Southern Farm Show (January 30-February 1, 2019); and the World Agricultural Expo (February 12-14, 2019).