Declining commodity prices will reduce the 2015 cash profits of US farmers to $89.4 billion, the third straight decline and the biggest single-year drop since 1931-1932, according to the Department of Agriculture.
Revenues from corn, wheat and other crops will be $182.6 billion, a 7.9 per cent decline from 2014, with lower prices pinching sales for equipment maker Deere & Co. and chemical makers including Syngenta AG. Livestock sales will fall 4.9 per cent from last year’s record, the USDA said in its first farm-income forecast of the year.
“Our ability to produce is outrunning our markets,” said Harwood Schaffer, an agricultural economist at the University of Tennessee in Knoxville, in an interview before the report was released. “Farmers are getting squeezed.”
Boom times are ending for US farmers, who are tightening their belts as low crop prices and rising costs erode incomes that peaked earlier this decade. Decreasing profits is also eroding the value of land, Farmers National Co., which manages 2.1 million acres of farmland in 24 states, said last week.
Sharpening Pencils
“With profits coming down, farmers are sharpening their pencils when it comes to input purchases,” Gregory Friedman, vice president of investor relations at Delaware- based DuPont, a maker of seeds and crop chemicals, said in a 27 January conference call. Higher inventories in the Americas will present “headwinds” in chemicals, Friedman said.
Seed-care sales, which include chemical treatments, in the Western Hemisphere have been harmed by lower corn acreages and prices, Syngenta Chief Financial Officer John Ramsay said in a 4 February earnings conference call. The Basel, Switzerland-based company reported 2014 sales in North America fell 7 per cent, even as global sales increased.
Bloomberg News, edited by ESM
