News

Declining capital expenses partly helping farm incomes

USDA’s Deputy Chief Economist says American farmers have been resilient adjusting to continued low commodity prices which has helped increase the agency’s August net farm income forecast.

Warren Preston says one way farmers have cut costs includes reducing capital expenses which could cause concern longer term.

“Which might be an indicator that farmers are not reinvesting as much in new capital.  You can do that for a while but at some point, the sector is going to have to look at reinvesting in buildings, machinery, and other capital expenses to maintain the low cost of production.”

USDA is estimating net farm income at $88 billion, up from $63 billion in their March forecast because of expected decreases in production expenses and increased government payments.