USDA Reveals 2014 Forecast

In its first 2014 forecast, the USDA said that lower crop prices will cut annual farm profits 27%, reported Businessweek.

Agricultural net income will be $95.8 billion, versus $130.5 billion last year. Income from major crops, such as corn, soybeans and wheat, will be $189.4 billion, down 12%, while expenses for feed, chemicals and other items will be $348.2 billion, down 11%.

Flat demand for corn to make ethanol, and fewer exports to China, may halt gains in farmland values after a 37% jump since 2009, leaving farmers with less to invest.

In November, the USDA estimated 2013 profit at a record $131 billion, and the most since 1973 when adjusted for inflation.

U.S. farm machinery loans are at a two-year low, the Kansas City Federal Reserve said last month. Lower crop prices will make farmland less attractive to investors and discourage farmers from seeking financing, which may hurt purchases throughout rural areas, said a Fed economist.