The U.S. economy continues to outperform expectations. Year-over-year growth in gross domestic product has been positive for 36 consecutive quarters, unemployment is the lowest in nearly 50 years and inflation remains mostly flat. While the U.S. economy roars along, the farm economy continues to struggle. The Agriculture Department’s most recent Farm Sector Income Forecast revealed that net farm income in 2018, a broad measure of farm profitability, is projected at $66.3 billion, down 12 percent from prior-year levels. After adjusting for inflation, net farm income in 2018 is projected to be at the third-lowest level in more than two decades.
A variety of factors influence net farm income. Lower commodity prices drive profitability down, but higher yields can somewhat offset the effect of lower commodity prices. Higher costs obviously reduce profitability. Read the Dec. 4 Market Intel update for end-of-year projections for cash receipts, expenses and net farm income in 2018.