Brace yourself. According to a new study from CoBank, the drop in farm income over the past three farming seasons has been the biggest plunge since the Great Depression.
"The drop in farm income over the past three years is the steepest decrease since the Depression," says Tanner Ehmke, CoBank senior economist covering, the grains, oilseeds and ethanol, and farm supply sectors. "Producer incomes have fallen more than 50% from 2013 to today and their debt-to-income ratio is on the rise.”
When cash flow becomes an issue, farmers tend to put off whatever bills can wait. It’s not a surprise that total accounts receivable for ag retailers has also increased. “[Accounts receivable] posted an 11% gain for 2015, and that's expected to grow in the year ahead due to ongoing farmer cash flow challenges," Ehmke says.
Low commodity prices are causing heartburn, and some lawmakers are frustrated the current farm bill isn’t doing enough.
“There have been real problems with the commodity title of this farm bill,” says Kristi Noem (R-South Dakota). “We’ve had some discrepancies from county to county that have impacted producers in a negative way.”
Drought plaguing the Northeast is likely to make the situation worse for farmers there as yield expectations in the region continue to evaporate.