Farm Income Down, Expenses Up

Barn

By Brent Gloy

The U.S. farm sector is in the midst of a major downturn.  As we discussed a couple of weeks ago, 2016 looks to be the third straight year of declining farm income.  Much of this has been driven by falling commodity prices, but the story is a bit more complicated than just falling commodity prices.  This week we look at how expenses and net income have evolved in the sector. Continue reading

Early Signs of Farm Fixed Expenses Falling

4618668856_9ddf2b5be0_m by David A. Widmar

As we’ve pointed out in previous posts (most notably here), a return to profitability for producers in light of lower commodity prices will require a combination of three scenarios: 1) variable costs moderate through eventual reduction in farmer demand for inputs 2) fixed costs decline through reduction in fixed asset demand and values, and/or 3) output prices may improve. About a year ago we noted that fixed expenses were still increasing, but at much slower rate. This week we take an updated look at fixed expenses to evaluate if producers have adjusted their cost structure lower. Continue reading