By JORDAN STRICKLER

Kentucky Correspondent

WASHINGTON, D.C. — Farmers are in for another year of disappointing returns, according to the USDA’s Economic Research Service (ERS).

In its most recent Net Farm Income Forecast, the ERS predicts net cash farm income will be at its lowest in nine years. According to the report, the average net cash farm income is forecast to be down $16,600 (19.9 percent) to $66,700 this year, the fourth consecutive decline since 2014.

Net farm income, a broad measure of profits, is forecast to decrease $9.8 billion (13 percent) from 2017 to $65.7 billion in 2018, after increasing $13.9 billion (22.5 percent) in 2017. Net cash farm income is forecast to decrease $12.4 billion (12 percent) to $91.5 billion.

In inflation-adjusted 2018 dollars, net farm income is forecast to decline $11.4 billion (14.8 percent) from 2017 after increasing $13 billion (20.3 percent) in 2017. If realized, inflation-adjusted net farm income would be just slightly above its level in 2016, which was its lowest level since 2002.

Total farm production expenses, including operator dwelling expenses, were forecast up $11.8 billion, or 3 percent, in nominal terms to $365.9 billion in 2018. This was led by increases for fuels and oil, interest, feed and hired labor.

Farm debt was forecast to increase $13.8 billion to $406.9 billion, a 4 percent rise; that is led by a 4 percent rise in real estate debt. The farm sector debt-to-asset ratio was expected to rise, while the total rate of return to farm assets was expected to decline in 2018.

Inflation-adjusted net cash farm income is forecast to decline $14.6 billion (13.8 percent) from 2017 to $91.5 billion, which would be the lowest real-dollar level since 2009. Net cash farm income encompasses cash receipts from farming, as well as farm-related income including government payments and minus cash expenses.

“Many farm families are in significant financial stress right now,” said National Farmers Union President Roger Johnson. “They are burning through equity – farm income has been cut in half over the past five years, and a majority of family farmers are currently earning negative farm income.

“Now, largely because of volatility in trade and depressed biofuel markets, there is no improvement in prices in sight.”

A $12 billion aid package is alleviating the concerns of a few and has increased farmer sentiment slightly, according to the latest Purdue University/CME Group Ag Economy Barometer. Based on a monthly survey of 400 agricultural producers from across the country, the barometer had an August reading of 129, 12 points higher than July but still well below readings from May and June – the higher a reading, the more positive sentiment.

The aid income, however, is only a bandage for most farmers. “Farmer sentiment has improved over the past month, but producers are uncertain about the aid package’s ability to offset income losses on their farm,” said James Mintert, the barometer’s principal investigator and director of Purdue’s Center for Commercial Agriculture.

The ERS forecasts cash receipts for all commodities to remain nearly stable in 2018 at $374 billion. Both total animal and animal product and total crop receipts are forecast to be relatively unchanged from last year, as increases in receipts for some commodities are offset by declines in others.

Receipts for milk are expected to be hit the hardest, with a decline of $2.8 billion (7.4 percent) in 2018. Poultry and eggs are expected to see an increase of $5.2 billion (12.1 percent).

A forecast $800 million (1.8 percent) decrease in corn receipts will be partially offset by a projected 6.3 percent increase ($500 million) in receipts for wheat. Direct government farm payments are forecast to decline $2 billion, or 17.4 percent, to $9.5 billion in 2018, with most of these declines due to lower anticipated Agriculture Risk Coverage and Price Loss Coverage program payments.

A history of slimmer profit margins means most farm households typically receive income from both farm and off-farm sources. The total median income of U.S. farm households increased steadily over 2010-14, reaching an estimated $81,637 in 2014 in nominal terms, but fell 6 percent in 2015 and has decreased slightly ever since.

This year will not be an exception, as it is forecast to fall 0.7 percent from its 2017 level, to $75,474.

Median farm income earned by farm households is estimated at minus-$800 in 2017 and is forecast to decline by $1,691 in 2018. In recent years, slightly more than half of farm households have had negative farm income each year. Most of these households earn positive off-farm income – and median off-farm income is forecast to increase 2.8 percent from $67,500 in 2017 to $69,392 in 2018.