Posted February 18, 2014
USDA’s Economic Research Service (ERS) recently
released a report projecting a decline in net farm income for 2014 due to low
corn prices. The decline will likely
raise the cost of the new farm bill over the next few years, according to a
Politico article available here. Capital Press also reported on the story here.
The report, available here,
shows that net farm income is projected at $95.8 billion in 2014, a 26.6
percent decline from 2013’s forecast of $130.5 billion. The 2014 projection is the lowest since 2010, but “would
remain $8 billion above the previous 10-year average.” Adjusting for inflation, 2013’s net farm
income is expected to be the highest since 1973.
Corn prices are cited as a major reason for the
decline. For the 2014-2015 marketing
year, the report projects a seasonal average price of $3.65 per bushel of corn
compared to $4.50 for the current year.
Since the decline is steeper than the projection used
by the Congressional Budget Office (CBO) to score the farm bill, some are now
wondering what the new farm bill will actually cost.
The ACRE revenue protection program is being replaced
by the new ARC (Agricultural Risk Coverage) program. Some are concerned that since ACRE and ARC
are similar, the report’s projected spike in payments under ACRE would be
similar under ARC.
On the other hand, House and Senate negotiators drafted
ARC to be less generous than ACRE, tying payments to historic base acres,
rather than total planted acres.
Department economists will present a more thorough
forecast next week at the annual Agricultural Outlook Forum held on Feb.20-21.
For more information on farm bills, please visit the
National Agricultural Law Center’s website here.
