The Farm Credit System reported $4.8 billion in net income in 2016, a $160 million, or 3.4 percent, increase over the previous year.
The jump is due primarily to a $432 million, or 6.2 percent, increase in net interest income. Net interest income stood at $7.4 billion at the end of 2016 compared to $7.0 billion the previous year. The increase resulted from higher average earning assets, which grew $24.7 billion, or 9.0%, to $299.6 billion for 2016.
In the fourth quarter of 2016, the Farm Credit System reported net income of $1.3 billion, up 4.3 percent compared to the fourth quarter of 2015. The increase is primarily due to a spike in net interest income, which jumped 7.0 percent to $1.9 billion for the fourth quarter of 2016.
“The system continues to execute its mission of lending to rural America despite headwinds arising from low prices for certain commodities,” Tracey McCabe, president and CEO of the Federal Farm Credit Banks Funding Corporation, said. “Credit quality remains solid and system institutions remain well capitalized.”
The United States Department of Agriculture (USDA) forecast estimates 2016 farmers’ net cash income at $91.9 billion, down $12.8 billion from 2015 and $11.3 billion below its 10-year average of $103.2 billion.
The USDA’s outlook for the farm economy in 2017 sees net cash income increasing $1.6 billion over 2016 levels to $93.5 billion. This would still be $9.7 billion below the 10-year average. The projected increase in farmers’ net cash income from 2016 to 2017 is primarily due to an expected $3.7 billion increase in farm-related income.
The Farm Credit System provides financial services for farmers through four affiliated banks and 73 associations. It funds approximately 41 percent of all U.S. farm business debt.