By DOUG SCHMITZ

Iowa Correspondent

WEST DES MOINES, Iowa — A new analysis is disputing the USDA’s Economic Research Service’s (ERS) projected figures on 2017 U.S. farm income the USDA released in August.

According to Farm Policy Facts in Washington, D.C., although the projected increase in national farm income (NFI) in 2017 is a positive sign, downgraded conditions in 2016 are the real story.

“The revised net farm income numbers from the USDA for 2016 confirm what farmers already knew: that farm income has dropped dramatically over the past three years, and while forecasted NFI for 2017 is expected to improve a bit, the fact remains that NFI is half of what it was in 2013,” said Dave Miller, Iowa Farm Bureau Federation director of research and commodity services.

“Farm Policy Facts is correct in noting that the decline in NFI was even steeper than was previously thought, and that farmers are burning through reserves and equity quicker than has been previously projected,” he added.

The ERS had projected 2016 NFI to be $68.3 billion, but the Aug. 30 update reduced it by 10 percent to $61.5 billion.

“These updated figures add up to a 50 percent drop in three years, and farmers and ranchers continue to deal with extremely hard times, thin to negative margins and dwindling reserves and equity that small, projected increases – or increases on paper – may do little to mitigate,” the Farm Policy Facts analysis read.

“Even if the projected increase for 2017 is realized,” the analysis added, “the last two years’ NFI would remain at its lowest level since 2009.”

The projections of U.S. farm income released by the USDA in its August Farm Sector Income Forecast suggested while farm income may have hit rock bottom in 2016, there would be an uptick in both net farm and net cash income in 2017.

Moreover, after three consecutive years of decline, the USDA’s August report also said net cash income and net farm income are both forecast to rise in 2017, relative to 2016 estimates, adding that net cash farm income for 2017 is forecast at $100.4 billion, up $11.2 billion (12.6 percent) from 2016.

“Net farm income, a broader measure of profits, is forecast at $63.4 billion, up $1.9 billion (3.1 percent), relative to 2016,” the USDA said in August. “The stronger forecast growth in net cash income is largely due to an additional $9.7 billion in cash receipts from the sale of crop inventories.

“The net cash farm income measure counts those sales as part of current-year income, while the net farm income measure counted the value of those inventories as part of prior-year income,” the USDA added.

If realized, the USDA said the forecast 2017 value of crop production ($180.5 billion, the lowest total since 2010) would represent a decline of $8.5 billion (4.5 percent) from 2016.

However, Miller said the drop in NFI has been even more pronounced for crop producers than for livestock producers.

“Hidden in national aggregate numbers is an even greater drop in NFI for corn, soybean, wheat and cotton producers than what has happened at the national average,” he said.

According to an official statement by Farm Policy Facts, “Our analysis also takes a look at the difference in nominal dollars, which is often used to record NFI, and “real dollars,” which allows for a more ‘apples to apples’ comparison.”

“When looking at NFI adjusted in real 2017 dollars over time, it is clear that while NFI has remained relatively stagnant, the value of production and expenses have trended upward, despite real declines in recent years,” it read. “In addition, our analysis notes that in NFI reports, national numbers are used, overlooking significant differences from farm to farm and region to region.

“On the surface, the new ERS report on NFI may show a hint of promise for the potential recovery of the farm economy,” the statement added. “However, a closer look at the data in the report shows that tough times persist.”