By JORDAN STRICKLER

Kentucky Correspondent

WASHINGTON, D.C. — Annual farm income for 2018 is projected to be at its lowest level since 2006, based on a new report by USDA’s Economic Research Service (ERS).

Lackluster crop prices and increasing input costs are leading to what the ERS believes will be a 6.7 percent decline in net farm income from $63.8 billion in 2017 to $59.5 billion for the current year, as well as the lowest average of net cash farm income since 2011.

This figure is less than half of what producers realized five years ago, when net income reached a record $123.8 billion. This new low comes as Congress begins discussions on a new farm bill and is leading many to demand stronger safety nets for farmers.

“The farm economy has been on a sharp decline for five years, and projections do not indicate we’ll get much relief any time soon,” said Roger Johnson, president of the National Farmers Union. “In fact, this latest release from ERS indicates a majority of farmers have had negative farm income in recent years.

“Family farmers and ranchers have no control over this fate, and during times as tough as these they need a strong safety net to help keep them on the farm. Congress must increase spending on farm programs that have not provided adequate relief to this point, and they must do so soon. We need a strong farm bill in 2018.”

The ERS expects 2018 crop revenues will decline by 0.8 percent to $188.2 billion, with income from animals and animal-related products to drop 0.3 percent to $174.9 billion. Total production expenses are forecast up 1 percent, $3.5 billion, in nominal terms to $359.2 billion.

The 2018 forecast for farm business average net cash farm income is $93,200, the fourth-consecutive decline since 2014 and the lowest average since 2011.

Years of declining revenue and increased expenses have forced more farmers to take out loans in order to keep their operation afloat. According to the Kansas City Federal Reserve, borrowing increased by 51 percent in the fourth quarter from a year ago. Additionally, direct government farm program payments are forecast to decline by 18.6 percent ($2.1 billion) from 2017.

Following a hearing in which USDA Secretary Sonny Perdue briefed the House Agriculture Committee on the state of the rural economy, Chair Michael Conaway (R-Texas) noted how important the upcoming farm bill is.

“We are writing this farm bill under dramatically different circumstances than we were four years ago, when prices were high and rural America was thriving. Today, a host of factors – including natural disasters and high foreign subsidies, tariff and non-tariff barriers – have all contributed to chronically depressed prices,” he explained.

In his seven-page statement to the committee, Perdue described the state of the farming economy as fragile, that producers would “face tight bottom lines, even negative returns in some cases.” He also projected continuing low commodity prices and “trade challenges in the face of large global supplies and a relatively strong dollar in the coming year.”

One of the most important factors in the coming year are North American Free Trade Agreement (NAFTA) negotiations, but Perdue said he is optimistic about what a new agreement by the end of the year might bring. “I am more hopeful than I have been. I think we’ll have a deal by the end of the year.”