Vilsack: outlook of overall farm economy strong in face of challenging markets
Washington — Agriculture Secretary Tom Vilsack said that despite challenging markets, the recently released Farm Income and Financial Forecasts for 2016 continues to show that the health of the overall farm economy is strong.
After reaching record highs in 2012-2014, net farm income declined in 2015 and is forecast to decline in 2016, but the bigger picture shows that farm income over the last five-year period reflects the highest average five-year period on record.
The Ag Secretary noted that the comprehensive farm safety net provided by the 2014 Farm Bill will continue to help America’s farmers and ranchers respond to market conditions and provide financial stability for producers.
Farm Bill program payments are forecast to increase over 19 percent to $12.9 billion in 2016, primarily through Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) payments.
“As we saw in the August forecast, the estimates again show that debt to asset and debt to equity ratios — two key indicators of the farm economy’s health — continue to be near all-time lows, and more than 90% of farm businesses are not highly leveraged," Vilsack said in his statement. "Median household income for farming families remains near historic highs and is expected to remain stable relative to 2015. In 2016, higher off-farm earnings are expected to help stabilize losses due to low commodity prices."
Vilsack believes that the trend in strong household income reflects work of the Obama Administration since 2009 to make significant and targeted investments to help rural America thrive, including farming and non-farming families alike.
"At the beginning of the Obama Administration, rural areas were reeling from the Great Recession. Rural counties were losing 200,000 jobs per year, rural unemployment reached nearly 10 percent, and poverty rates reached heights unseen in decades," he said. "Over the past eight years, USDA has invested in building a more robust system of production agriculture, expanding foreign markets for U.S. farm goods, bolstering local and regional food systems across the country, and creating a new biobased economy in rural communities that today supports more than 4.2 million American jobs."
The former Iowa governor pointed out that rural counties added over 250,000 jobs in both 2014 and 2015, and the rural unemployment rate has dropped below 6 percent for the first time since 2007. Rural populations have stabilized, he said, and are beginning to grow. Median household income in rural areas increased by 3.4 percent in 2015, poverty rates have fallen, and child food insecurity is at an all-time low.
“The future of rural America looks much brighter today, but we must continue to focus on the targeted investments to help the rural economy retool itself for the 21st century,” he said.