Kansas State University


Department of Agricultural Economics

Focus on Research: 2016 Fiscal Stress Test for Famers

101106communications046-2Recent Kansas State University department of agricultural research shows average net farm incomes in Kansas are the lowest they have been since 1985.  This means some farms could be facing significant financial stress before the spring of 2017, as producers and lenders make some hard decisions in the upcoming year.


According to the recently released Kansas Farm Management Association (KFMA) 2016 net farm income report, the average 2015 net income for Kansas farms was $4,568. That is a 95% decrease in income levels when compared to the 2014 fiscal year.  Producers are also facing the first net worth loss on Kansas farms since 2002 as net worth fell by an average of 2.4% across the state.  Tightening cash position for farms is a direct result of lower commodity prices and decreased profitability across both crop and livestock operations.


As an example, Northeast KFMA economist Clay Simons says some of the livestock operations within his region were hit hard by the recent downturn “everything they gained in 2014, if they weren’t hedged up, they gave it all back and then some in 2015.”


KFMA Executive Director and Kansas State University department of agricultural economics professor, Kevin Herbel, says the current agricultural environment means efficient operations will be key as producers move forward, “During the tougher financial times, it becomes very important for farmers to make decisions based on careful planning, good communication and a quality set of records.”


Herbel stressed that clear communication with everyone involved in the farm production, including agricultural lenders, will make it easier to get in front of any problems the operation may face.  Farmers are also in a better financial state in general due to the recent high profitability in agricultural markets in previous years.  This provides a greater buffer during this downturn than was seen in the 1980s.


The KFMA annual net farm income report is generated from over 2,000 farms broken down region by region within the state of Kansas. The data from the report can be found on www.AgManager.info.  The site features tools and current research on livestock and crop production from the Kansas State University department of agricultural economics.  The department of agricultural economics is offering a Risk and Profit conference on August 18th through the 19th to offer producers insight into the current research and management techniques to help producers mitigate losses during the current fiscal downturn.  Visit www.AgManager.info/events for more information about the conference.