Farm Crisis? What Crisis? Ag Interests Cry Wolf on Economy
In the wake of President Trump’s tariffs, agriculture interests are claiming that the farm economy is crashing. Agriculture Secretary Sonny Perdue said recently that farm debt is rising to levels not seen since the dark days of the 1980s, when thousands of farmers went bankrupt.
But new research from the secretary’s own Department of Agriculture shows there is no crisis: Farmers are actually expected to do better in 2019 than in recent years.
The Farm Income Forecast, released last week by the USDA Economic Research Service, paints a considerably better picture of the farm economy than many recent news reports.
One important measure of farm profitability, net farm income, is expected to grow 10 percent in 2019, to almost $70 billion dollars, according to the analysis. Many agriculture interests claim that, because this number is lower than during the price boom of 2013 and 2014, farmers face ruin.
But USDA’s own economists think that this $70 billion income is the new normal, and that commodity prices were unusually inflated during the boom years. If 2013 and 2014 are removed from income averages, 2019’s net farm income is right in line with that of recent years.
In discussions of rising farm debt, often left out is the fact that farm assets, such as the value of farm land and real estate, have also been rising. The ratio of debts to assets is expected to rise only a minuscule amount in 2019, to 13.86 percent – significantly lower than the 22.9 percent reached at the peak of the 1980s crisis.
Overall median farm household income is also projected to increase in 2019, to almost $79,000. This number, which measures both on- and off-farm income, is directly comparable to U.S. household income. In 2017, the most recent year for which data is available, U.S. median household income was $61,372 – significantly lower than farm household income.
Agriculture interests perennially claim the sky is falling to justify the need for more farm subsidies. But in 2018, $13.8 billion in federal farm subsidies went to farmers, a 12-year high. And that includes only some of the $9.2 billion the president is paying out to farmers to offset his own trade war.
Ag interests are sure to keep crying wolf. But the fact is that there is no farm crisis, and farmers do not need more taxpayer handouts to stay afloat.