US farm income is forecast to drop to $54.8 billion in 2016, down from a peak of around $120 billion in 2013. The 2015 to 2016 drop is projected to be the smallest in the past four years and is largely driven by declines in commodity prices.
Adjusted for inflation, 2016 is expected to see lower farm income than all but five years since 1970. Of those years, all except for 2002 were in the 1980s, period of considerable distress for the US farm sector.
The farm sector debt-to-asset ratio has also increased in recent years, but it remains lower than the peak seen in 1985, at just 13.2%. Inflation-adjusted debt levels are close, but still below the high levels seen in the early 1980s.
Around 80% of the value of farm sector assets is tied to farm real estate. Both farm real-estate and nonreal-estate assets are projected to fall in value in 2016, after having done the same in 2015.