USDA is forecasting an increase in net farm income in 2019, primarily driven by higher commodity prices.
At $69.4 billion, net farm income is expected to be 10% above 2018 after decreasing 16% last year from 2017, according to USDA Economic Research Service.
Crop cash receipts are forecast to increase 2% to $201.7 billion, and animal and animal products receipts are expected to increase 2.6% to $179.9 billion.
Increases in cash receipts are expected for wheat due to an increase in prices and quantity sold; corn due to higher prices; and vegetables and melons due to an increase in potato receipts.
Increases are also expected for fruits and nuts, up 8.2%; rice, up 9.1%; and cotton, up 6.5%.
Soybean receipts, however, are expected to decrease 6.6%, reflecting anticipated declines in both price and quantity sold.
Milk receipts are expected to increase 7.8%, and receipts for cattle and calves are expected to increase 4% — with an expected increase in prices and quantity sold for those commodities.
Increases are also expected for broiler and turkey receipts, up 0.3% and 7.5%, respectively.
Hog cash receipts and chicken egg receipts, however, are expected to decrease by 3.2% and 7%, respectively.
On the spending side, total production expenses are forecast to be relatively stable with an increase of 0.6% to $372 billion.
Spending on fuels and oil is expected to decrease 8.1% on a forecast of lower diesel prices. Seed, pesticide and fertilizer expenses are also expected to decline due to fewer expected acres for the top 14 crops.
Feed expenses, which account for 18% of total cash expenses, are expected to increase 1.2%. Hired labor costs are forecast to increase 6.6%.
Interest expenses are expected to increase for the sixth year in a row, rising 2.8%, due to higher debt levels and rising interest rates on new debt and existing variable-interest-rate debt.
John Newton, chief economist for the American Farm Bureau Federation, said in an analysis of the forecast that while the projections suggest 2019 could be better for many farmers, much is still up in the air.
Retaliatory tariffs are still in place, and Mexico and the EU recently threatened additional tariffs if U.S. tariffs on steel and aluminum are not removed or if the U.S. places tariffs on autos, he said.
“Additional tariffs would further erode our competitiveness in key agricultural markets and would weigh on farm income, as they did in 2018,” he said.
If markets are fully restored, however, demand for U.S. agricultural products would increase — likely lifting prices and farm income above USDA’s early projections, he said.
A supply shock would have a similar price- and income-boosting effect, he said.
In addition to trade instability, uncertainty remains regarding acreage decisions, the growing season and demand, he said.
USDA is scheduled to update its projections in August.