USDA Reports Say Trend Will Continue Next Year : Farmers’ Incomes Down Sharply

Net farm income is down sharply this year and will continue to fall in 1986, perhaps by another 10% or more, according to an Agriculture Department forecast released Monday.

The forecast and other farm economic projections were included in reports to be presented today at the department’s 61st annual Agricultural Outlook Conference, a three-day meeting of economists and other analysts.

“Assuming no major policy changes or weather disruption in the year ahead, net farm income is projected to decline to a range of $22 billion to $26 billion as gross income falls more sharply than production expenses,” said John E. Lee Jr., head of the department’s Economic Research Service, in his report.

“In recent years, net farm income has been very volatile because of extremes in weather patterns and crop output,” Lee said.

Economists include the changing values of inventories in one method of computing farm income. Mainly because 1984 saw a huge buildup in crop holdings, net income climbed to a record $34.5 billion last year from a 12-year low of $15 billion in 1983--a year when drought and government acreage curbs sharply reduced output.

“The inherent instabilities and uncertainties” of agriculture continue to play a large role, Lee said. And there are similarities between today’s farm situation and the hard times of the 1930s.

“Yet, there are notable differences,” he said. “One is the increasing vulnerability of agriculture not only to economic fluctuations at the national level but also to developments in the world marketplace.”

Lee also said farmers’ 1985 net cash income--the difference between gross cash income and cash expenses--”may equal or exceed the 1984 record high of $39.2 billion.”

No relief is in sight for hard-pressed farmers who have seen land values plummet in recent years, shrinking their assets and wiping out collateral needed to secure loans.

Lee said that, because of a continued decline in land values, farm real estate values nationally are expected to drop further by the end of this year to a range of $790 billion to $840 billion, compared to $856.1 billion on Dec. 31, 1984.

By the end of 1986, those assets could decline further--to a range of $770 billion to $830 billion, according to Lee’s figures.

In a related story, an estimated 475,000 wheat farmers soon will get government subsidy checks totaling $1.5 billion as the final installment on 1985 crop payments, the Agriculture Department said.

The so-called deficiency payments will be in addition to about $700 million that wheat farmers collected in advance when they began signing up for the 1985 program more than a year ago. Farmers had to agree to cut their wheat acreage by 30% in order to qualify for federal price supports and payments.