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Farm Credit System Reports Strong Financial Position in '16
USAgNet - 04/14/2017

At its monthly meeting this week, the Farm Credit Administration board received a quarterly report on the economic conditions affecting agriculture and an update on the condition of the Farm Credit System as of year end 2016.

According to the report, the U.S. Department of Agriculture projects net farm income, which includes noncash items such as the value of inventory adjustment and depreciation, to decline 9 percent in 2017; however, net cash income is expected to rise by 2 percent. Prices remain low for certain commodities because of strong production levels and ample supplies.

South America, which is expected to produce record corn and soybean crops this year, directly competes with the United States in the export of these crops.

In general, the protein and dairy sectors should be profitable in 2017, helped by strong demand and low feed costs. There is, however, heightened concern in the poultry sector because avian flu was detected recently in a small number of commercial flocks.

For 2016, the System reported strong earnings and higher capital levels. Portfolio credit quality remained favorable although risk indicators, while still relatively low, were higher. While the challenges facing agriculture will affect credit quality in its loan portfolio, the System continues to be financially safe and sound and is well-positioned for the risk environment.


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