Declining Net Farm Income; The Story with Two Possible Headlines

by Brent A. Gloy and David A. Widmar

Earlier this month, the USDA released its 2015 forecast of net farm income. The estimates were headline worthy. Net farm income is forecast to be down nearly 32% from 2014 and at the lowest levels since 2009.

Most of the media coverage of the report looked at net farm income relative to the last few years, such as in figure 1.  Over this time period the picture is certainly sobering.  If the forecasts of 2015 are realized, net farm income will have fallen 43% in just two years.   Without doubt, anytime net income for any industry falls 43% in two years things are serious. But what is often overlooked is how the 2015 net farm income forecast fits into the long run.