However, this report focuses singularly on aggregate national net farm income and the status of the farm debt-to-asset ratio as reported by the U.S. Department of Agriculture's (USDA's) Economic Research Service (ERS). USDA's 2017 Farm Income Forecast

According to ERS, net farm income is forecast at $63.4 billion in 2017, up 3% from last year ( Table 1 ). The forecast rise in 2017 net farm income comes after three consecutive years of decline from 2013's record high of $123.8 billion. The 2017 net farm income forecast is substantially below the 10-year average of $86.4 billion ( Figure 1 ). In inflation-adjusted dollars, the 2017 forecast is the second lowest since 2003 ( Figure 2 ). Net cash income is also projected to be up in 2017 but by a larger share (12.5%), driven largely by sales from previous years' inventory, to $100.4 billion. Since the record highs of 2013, net farm income and net cash income have fallen by 49% and 26%, respectively ( Figure 1 ). The downward trend in farm income since 2013 was primarily a result of the significant decline in most farm commodity prices since the 2013-2014 period. The price outlook for 2017 is mixed. Lower marketing-assistance loan benefits and the end of the cotton ginning cost-share program, which paid $326 million in 2016, more than offset projected higher Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) program payments of $8.4 billion—triggered by lower commodity prices. U.S. farm prices are supported in part by global demand for U.S. agricultural exports ( Figure 18 ), which are expected to rise to $139.8 billion (+8%) in 2017—still well below the record of $152.3 billion set in 2014. As a result, the outlook for these two crops is critical to both farm sector profitability and regional economic activity across large swaths of the United States as well as in international markets. Government Payments

Government payments in 2017 are projected to be down slightly, by 0.2% from 2016, at $13.0 billion. Production expenses will affect crop and livestock farms differently. Agricultural Trade Outlook

U.S. agricultural exports have been a major contributor to farm income, especially since 2005. USDA projects U.S. agricultural exports at $139.8 billion in 2017, up 8% from 2016's total ( Figure 18 ), due largely to an improving economic outlook in several major foreign importing countries. ROW is expected to account for 36% of U.S. agricultural exports in 2017. Farm Asset Values and Debt

The U.S. farm income and asset-value situation and outlook suggest a relatively stable financial position heading into 2017 for the agriculture sector as a whole but with considerable uncertainty regarding the downward outlook for prices and market conditions for the sector and an increasing dependency on international markets to absorb domestic surpluses:
Farm asset values—which reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments—are projected to be up 4% in 2017 to a nominal $3,075 billion ( Table 3 ). On-Farm vs. Off-Farm Income Shares

Average farm household income (sum of on- and off-farm income) is projected at $119,598 in 2017 ( Table 2 ), up 1.4% from $117,918 in 2016 but well below the record of $134,164 in 2014. U.S. Total vs. Farm Household Average Income

Since the late 1990s, farm household incomes have surged ahead of average U.S. household incomes ( Figure 26 and Figure 27 ). In 2015 (the last year for which comparable data were available), the average farm household income of $119,880 was about 51% higher than the average U.S. household income of $79,263 ( Table 2 ).
According to USDA's Economic Research Service (ERS), national net farm income—a key indicator of U.S. farm well-being—is forecast at $63.4 billion in 2017, up 3% from last year. The forecast rise in 2017 net farm income comes after three consecutive years of decline from 2013's record high of $123.8 billion. Net farm income is calculated on an accrual basis. Net cash income (calculated on a cash-flow basis) is also projected to be up in 2017 but by a larger share (12.6%), driven largely by sales from previous years' inventory, to $100.4 billion.
The 2017 net farm income forecast is substantially below the 10-year average of $86.4 billion and would be the second lowest since 2003 in inflation-adjusted dollars. This is primarily the result of the outlook for continued weak prices for corn, soybeans, and cotton. Most crops and livestock product prices remain significantly below the average for the period of 2011-2013, when prices for many major commodities attained record or near-record highs. Net farm income is down 49% since 2013; net cash income is down 26%. Farm-sector production expenses have fallen slightly over that period (-1%) but not nearly as quickly as commodity prices and revenue, thus contributing to lower aggregate income totals.
Partially offsetting the decline in farm revenues is a rise in government payments since 2013 (+18%). In 2017, payments are projected at $13.0 billion, down slightly (-0.2%) from 2016. The Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) revenue support programs for major field crops are expected to trigger payments of $8.4 billion in 2017, up 2.5% from 2016.
U.S. farm income experienced a golden period during 2011 through 2014, due to strong commodity prices and agricultural exports. In 2017 agricultural exports are forecast to be up 8%, at $139.8 billion, due largely to an improving economic outlook in several major foreign importing countries—but still well below 2014's record of $152.3 billion. U.S. agricultural exports are projected to account for 33% of farm sector gross earnings in 2017.
In addition to the outlook for slightly higher net farm income in 2017, farm wealth is also projected to be up 4% from 2016, to $3,075 billion. Farm asset values reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments. The outlook for slightly higher farm income has reversed the decline in farmland values experienced in 2016. Because they comprise such a significant portion of the U.S. farm sector's asset base (81%), change in farmland values is a critical barometer of the farm sector's financial performance.
At the farm household level, average farm household incomes have been well ahead of average U.S. household incomes since the late 1990s. In 2015 (the last year for which comparable data were available), the average farm household income (including off-farm income sources) of $119,880 was about 51% higher than the average U.S. household income of $79,263.
The outlook for a slight rise in net farm income and farm wealth suggests that the farm economy has at least temporarily stabilized but with substantial regional variation. Relatively weak prices for most major program crops signal continued tough times ahead. Heading into 2018, the financial picture for the agricultural sector as a whole remains dependent on continued growth in domestic and foreign demand sources to sustain prices at current modest levels. Improvements in agricultural economic well-being will hinge on crop harvests and prices, as well as both domestic and international macroeconomic factors, including economic growth and consumer demand.
This report is an update of the February 2017 version to take account of USDA's August 30, 2017, farm income update and the August 29, 2017, U.S. agricultural trade outlook update.