In “2016 Farm Income Decline – But…,” Bob Young, AFBF’s chief economist, analyzed the Agriculture Department’s August farm income projection. “There’s a wealth of information when one takes the time to dive into a detailed comparison between the February and the August cost of production estimates,” he noted.
Further, Young pointed out that one of the biggest changes is in the Net Rent to Landlords category. The February estimate suggested a slight rise in net rent to landlords in 2016 compared to the 2015 value, whereas the August value suggests rents have declined, continuing the trend that started in 2013. In fact, the new 2016 figures suggest net rent is down $3.2 billion from 2013 figures.
In addition, feed costs are actually projected to be $2.2 billion higher than February estimates.
Slightly higher feed grain and oilseed meal prices are driving at least part of that result.
In conclusion, “Farm income is going to be lower in 2016 than it was in 2015,” Young wrote. “We knew that. What this report does suggest, however, is that there are adjustments underway on the cost side that make good sense in our current environment.”