Home Farm profits down as 2015 ends

Farm profits down as 2015 ends


economic-forecast-headerAmerica’s farmers probably will see lower profits this year, according to the latest forecast by the U.S. Department of Agriculture’s Economic Research Service. And Virginia farmers are likely to be among them.

“Farm profitability peaked in 2013, which saw high prices not only in row crops but also the livestock sector,” said Jonah Bowles, Virginia Farm Bureau Federation senior agriculture market analyst. “Livestock is still, for the most part, a profitable sector, but some row crops are no longer profitable at the moment. And profits for Virginia farmers will follow the national trend, since beginning in the 1980s American agriculture has been influenced more by world prices than local sales.”

Net cash income for American farmers is predicted to be $93 billion in 2015, down about 28 percent from 2014 levels, the forecast said. If those figures hold, that would be the lowest net cash income since 2002 and a drop of 55 percent from the recent high of $123.3 billion in 2013.

Lower prices for both grain and livestock are the key drivers for the decline, while production expenses like fuel, seed and products like fertilizer declined 2.3 percent. Grain receipts are expected to drop 8.7 percent, and prices for milk, hogs, broiler chickens and cattle and calves could decline 12 percent this year.

Virginia’s farm economy is more dependent on poultry, cattle and dairy than on row crops, and Bowles said those sectors are doing better than corn, soybeans, wheat and cotton this year. But cattle prices have tumbled.

“For instance, the nearby contract for feeder cattle is hitting a new low almost every day,” Bowles said on Dec. 16. “Right now it’s about $1.47 a pound or $147 per 100 pounds for an animal, down from $212.50 per hundred pounds back in the first part of June.”

He said soft demand for beef consumption at home, more efficient cattle production and a strong U.S. dollar on world markets are all combining to drive cattle prices lower. Consequently, consumers are likely to see lower beef prices at the supermarket, he added.

But while grain prices are important to farmers, they have little impact on consumer prices, Bowles said. “Grains go through so much processing that the actual cost of corn and soybeans and wheat is negligible. You could double the price of wheat, and it would only add 7 cents to the price of a loaf of bread.”



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