By STAN MADDUX

Indiana Correspondent

WASHINGTON D.C. — Farm income in 2019 is still projected to increase, but not as much as originally predicted. The latest forecast comes after USDA Secretary Sonny Perdue recently described the economic situation in farm country as similar to the Farm Crisis of the 1980s.

USDA’s Economic Research Service (ERS) on March 13 predicted net farm income for the year would be $69.4 billion, or about 10 percent higher than 2018. The ERS noted average net farm income was $90 billion annually from 2000-17.

The latest projected increase is also below February’s USDA long-term forecast of $77.6 billion for 2019. The updated estimate was based on more recent supply and demand information, ERS said.

The revised income forecast is still viewed as a positive given the annual declines in farm income, which has dropped 50 percent since 2013. In late February, Perdue told the House Agriculture Committee that debt held by farmers has risen to 1980s levels, at $409 billion – up from $385 billion last year.

He also said the level of debt is up 30 percent since 2013 and loan demand remains “historically high.” He said the strain on farmers is comparable to the economic crisis of more than three decades ago. He blamed continued weak commodity prices along with other factors like the loss of exports to China from the ongoing trade dispute with the U.S.

On a positive note, Perdue said firm land values have kept debt-to-asset levels low by historic standards, at 13.5 percent. He also said the cost of borrowing has stayed relatively affordable from interest rates, despite going up slightly, remaining low.

Some industry experts disagree that economics now are as challenging as they were in the 1980s. They do agree things could get just as bad, however, if low prices and a storm of other factors working against farmers don’t eventually let up.

“It’s not rosy; don’t get me wrong. But, it’s not ‘the sky is falling’ here, I don’t think, right now – but we’ll see,” said Todd Hubbs, an agricultural economist at the University of Illinois.

Many farmers are dipping into equity to keep operating, and more could exhaust their financial resources if bottom lines don’t start improving. “There’s only so long these guys can hold on at this point,” said William Snell, an agricultural economist at the University of Kentucky.

In the 1980s, Hubbs and Snell said farmers didn’t have as much equity to fall back on due to land values plummeting, which forced more producers to borrow at a time when interest rates exceeded 20 percent. Snell said his concern is land values tanking and interest rates skyrocketing if the economic struggles in agriculture linger.

Farm bankruptcies, already up, would increase as a result. “We are getting into a critical time,” he said.

Agriculture in Kentucky is spread more evenly between grain and livestock than in states like Illinois, Indiana, and Iowa, where corn and soybeans are predominant. However, Snell said Kentucky is much in the same boat, from lower prices across much of the food spectrum.

He said many of the factors now hurting farmers worked to their advantage during a more profitable 2007-14. China increased imports from the U.S. and ethanol was booming.

He explained major events that lowered supplies also happened during a period when rising demand was helped by a weaker U.S dollar; typically, a weaker dollar increases U.S farm exports. Snell said the dollar has since gained strength, at a time when there’s now an ample worldwide supply of most farm commodities.

“It varies from producer to producer but yet in aggregate, we’re starting to feel the effects,” he said.

He said strong crop yields have softened the blow from low prices, and so have government payments to farmers in 2018 to make up for losses from the trade war. Hubbs said another positive is that farm income – at least in Illinois – rose last year.

“I don’t think we’re talking an ‘80s level farm crisis, and even if things deteriorate a little bit more I’m not sure we’re that close. At least that’s my opinion,” Hubbs said.

Carrie Litkowski, a senior ERS economist, said during an online briefing current farm incomes actually might be more normal than what they seem, especially since the drop was after a highly profitable two-year period.

“We’re starting to see a new average come out of here, especially if you take out the really unusually high years around 2013 and 2014, then the value we’re forecasting for 2019 really isn’t that far off from what we’ve seen in previous years,” she said.