Idaho ag industry doubts USDA forecast of increased farm income

By Sean Ellis

Idaho Farm Bureau Federation

POCATELLO – Idaho farmers and agricultural economists reacted skeptically, but hopefully, to USDA’s recent forecast that total U.S. net farm income would increase 10 percent in 2019.

They doubt it will prove true in Idaho but they also hope they’re wrong.

The U.S. Department of Agriculture forecast, released March 6, predicts total U.S. net farm income will increase $6.3 billion this year, to $69.4 billion. USDA forecasts higher net farm income largely due to higher commodity prices, as well as higher quantities sold.

USDA expects total expenses will remain stable compared to 2018.

The department’s forecast of higher farm income this year was greeted skeptically by those involved in Idaho’s agricultural industry, who were hopeful it would prove true but doubted it would, at least in Idaho.

“Boy, in my operation I really don’t see that happening,” said Meridian farmer Drew Eggers, who grows wheat, silage corn, mint and several seed crops. “I’d say that’s a little optimistic.”

Shelley farmer Stan Searle’s take on the forecast was blunt.

“That’s a fairy tale,” said Searle, who grows wheat and some quinoa. “I don’t know what they’re basing that off of.”

Searle said he expects his expenses to be about the same as last year while the revenue he receives for his farm commodities will be down.

“Our attitude this year is we’re taking steps to cut costs as much as we can,” he said. “I expect a loss this year on the farm.”

“I hope it’s right but I don’t have that rosy of a picture in my mind,” University of Idaho Agricultural Economist Ben Eborn said about USDA’s forecast of net farm income increasing 10 percent. “I just don’t see that happening.”

Sen. Jim Patrick, a Twin Falls farmer who grows a wide variety of crops, also doubted USDA’s forecast for a 10 percent increase in farm income would materialize, at least in Idaho.

“That’s not right in Idaho,” he said. “It’s too optimistic for what we’re actually getting.”

Doug Robison, Northwest Farm Credit Services’ Idaho president, said USDA’s 2019 forecast “suggests the potential for modest gains in Idaho.”

He pointed out that USDA forecasts increased cash receipts for both milk and cattle and calves, which are Idaho’s two biggest farm commodities in terms of cash receipts.

The USDA forecast calls for a 4 percent increase in cash receipts for cattle and calves and a 7.8 percent increase in cash receipts for milk.

U of I Agricultural Economist Garth Taylor said whether USDA’s forecast of higher farm income this year plays out in Idaho will largely depend on how the state’s dairy sector fares. Dairy cash receipts account for almost a third of the state’s total farm cash receipts.

When it comes to farm income, “In Idaho, it’s always milk, milk, milk and milk,” Taylor said.

Total net farm income in the United States decreased 16 percent in 2018 compared with 2017.

If USDA’s forecast of a 10 percent gain in total net farm income in 2019 is realized, the $69.4 billion total would still be 49 percent below the record level of $136 billion in 2013 on an inflation-adjusted basis.

USDA forecasts that U.S. total cash receipts for all farm commodities will increase 2.3 percent, or $8.6 billion, to $381.5 billion in 2019.

USDA expects cash receipts from animal products to increase 2.6 percent, or $4.6 billion, from 2018 because of expected increases in receipts from milk and cattle and calves.

Milk and cattle receipts are expected to rise based on both higher prices and quantities sold.

Total crop cash receipts are expected to increase 2 percent, or $4 billion, from 2018.

USDA expects wheat receipts to increase 5.4 percent and for potato receipts to increase 4.1 percent. Corn receipts are expected to increase 5.2 percent and receipts from fruit and nuts are expected to increase by 8.2 percent.

Total government farm payments are forecast to decrease 17 percent compared with 2018.

Total production expenses are forecast to remain largely unchanged at $372 billion, with expected increases in labor, feed and interest largely offset by decreased energy prices.

USDA expects labor costs to increase by 6.6 percent and for interest expenses to increase by 2.8 percent. The department also expects feed expenses, which account for 18 percent of cash expenses, to increase 1.2 percent.

The forecast expects seed, pesticide and fertilizer expenses to decline in 2019.

Eborn said he expects expenses for the main farm crops that Idaho grows to be higher this year.

When it comes to prices for those same crops, “Most of our crops in Idaho will be just flat,” he said. “I don’t see any big price changes in anything, because we’re oversupplied.”