Analysis: FAPRI Farm Income Outlook Less Positive Than USDA
FAPRI's baseline projection paints a bleak picture for agriculture, with the farm financial picture showing more of the same with continued pressure.
Tyne Morgan, FarmJournal's AgPro
April 8, 2019
The story of net farm income may be more of the same for 2019. The University of Missouri’s Food and Agricultural Policy Research Institute (FAPRI) released its 2019 Baseline Outlook to Congress Monday. The report is a measuring stick in order to set policy by looking at projections for the agriculture industry over the next decade.
The report digs into farm income projections, for both crop and livestock sectors.
FAPRI’s baseline projections point to little change in net farm income over the next decade, which could lead to further erosion in the farm financial picture for agriculture. For 2019, FAPRI sees livestock receipts not boasting the numbers USDA currently projects.
“We know that creates additional financial stress in the industry,” said Scott Brown, University of Missouri economist. “As you look across all of the commodities, we have growing supplies in almost all cases, so prices for many of those commodities will be probably sideways at best without some type of major event occurring is what this baseline really shows.”
USDA’s Net cash farm income forecast released in March showed an increase of $4.3 billion, or 4.7 percent, to $95.7 billion. FAPRI projects a smaller increase in 2019 net farm income, but when economists put it into perspective, the figure is still below the 2014-2017 average.
“When you look at net cash farm income, we’re showing flat net cash farm income impact in 2019 relative to 2018,” Brown said. ”Some value of inventory change information does show net farm income a little higher in 2019, similarly to USDA, but I think when you look at the USDA forward looking 2019 forecast, they had a fairly large increase in U.S. livestock cash receipts, that at this point the FAPRI baseline does not show. “
Brown said the main discrepancy between FAPRI’s projections and what USDA released in March is on the livestock side.
“That is one of the biggest differences we see between those numbers,” said Brown. “When you look at where we’ve been in terms of market prices for hogs and cattle his year, I would say it’s hard to talk about higher cash receipts for the livestock industry.”
Brown said the main factor that could temper any price strength is the supply side of the livestock equation, especially if tariffs on meat exports continue. Brown said his biggest concern right now is with the new U.S. Mexico Canada Agreement (USMCA) and if those tariffs will be removed.
“We’re going to talk about 4 percent more pork supplies being produced in the United States this year, we’re likely going to talk about beef production up 1 percent,” he said. “So, we need to move more domestic supplies of beef and pork to international markets.”
He said high tariffs on items like hams don’t help...
more, including video report [4:04 min.]