Dairy isn’t the only agricultural commodity facing a downturn in pay prices. In its latest forecast, USDA projects that farm income will be $59.5 billion nationally in 2018. That’s down from a $123.8 billion peak in 2013 for a reduction of 52 percent.

To say the least, that is a heavy hit in the pocket book. The total includes all farms from grain to livestock.

As for dairy, receipts have fallen $15 billion since 2014. That’s a reduction of $300,000 per farm, estimated John Newton, who is market intelligence director with the American Farm Bureau Federation.

As this situation has unfolded, farmers across the country have stepped up borrowing to cover costs. In addition, it’s expected that with climbing interest rates, borrowing costs for real estate loans will reach the highest levels since 1989. With that in mind, USDA forecasts interest on farm loans will be up nearly 40 percent when compared to 2013.

A bright spot for balance sheets has been land. Those values have been holding strong.

However, this could be a tumultuous year for some dairy farmers. We have been hearing reports that some dairy operations have so many milk check assignments (payments going to loans and expenses) that actual take home pay is almost nonexistent. In other instances, banks are conducting a thorough review of assets to ensure solvency of loans.

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(c) Hoard's Dairyman Intel 2018
February 19, 2018
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