Federal forecasters estimate that U.S. farm incomes will fall this year to the lowest level since 2002, reflecting a continued slump in prices for crops and livestock.

Net farm income will drop 3% to $54.8 billion from $56.4 billion last year, the Agriculture Department projected Tuesday. It would mark the third consecutive year of falling agricultural incomes after profits surged to a record $123 billion in 2013—the height of a boom that graced the Farm Belt earlier this decade.

Farm incomes are declining because prices for corn, soybeans and wheat have fallen sharply after three straight years of bumper U.S. crops and rising output elsewhere in the world. Overseas demand for some U.S. crops also has cooled, in part because of the strong dollar.

Corn prices have languished below $4 a bushel after soaring to more than $8 a bushel during the U.S.'s record-setting drought in 2012.

The government estimated that farmers' receipts from corn, the biggest U.S. crop by value, will drop by $800 million this year.

The USDA projected a $1.5 billion increase in farmers' receipts from soybeans as greater production offsets minor price declines. Soybean prices fell 15% last year as U.S. growers harvested the largest crop in history.

The nation's livestock producers also face lower profits in 2016, according to the USDA. The government forecast a 4.3% decrease in livestock receipts, reflecting a decrease in revenues for milk, hogs, broiler chickens and cattle. The declines come as U.S. producers continue expanding production of animals like hogs and broiler chickens, the government said.

Federal forecasters estimated a $3.8 billion decrease in production expenses for farmers, which would mark the first time since the 1980s that costs for crop inputs like seeds, fertilizer and pesticides had fallen for two years in a row.

Farmers' production expenses declined $10.1 billion last year, the USDA estimated.

Meanwhile, the USDA said government payments to farmers will rise about 31% this year to $13.9 billion, mostly from insurance-like programs that protect growers from price or revenue declines.

Write to Jesse Newman at jesse.newman@wsj.com

 

(END) Dow Jones Newswires

February 09, 2016 20:05 ET (01:05 GMT)

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