Made in America: Farm income forecasted to see double-digit decline in 2016

Editor’s note: Each Sunday, Talk Business & Politics provides “Made In America,” a round-up of state and global manufacturing news.

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FARM INCOME FORECASTED TO SEE DOUBLE-DIGIT DECLINE IN 2016
Net cash farm income is forecast at $90.1 billion and net farm income at $66.9 billion for 2016. Both measures are forecast to decline for the third consecutive year after reaching record highs in 2013 for net farm income and 2012 for net cash income, according to the U.S. Department of Agriculture annual farm sector forecast.

Net cash farm income is expected to fall by 14.6% in 2016, while net farm income is forecast to decline by 17.2%. These declines follow the 19.8% and 12.7% reductions in net cash income and net farm income, respectively, that occurred in 2015.

Overall, cash receipts are forecast to fall 6.2% or $23.4 billion in 2016 due to a $23.4 billion, or 12.3% drop in animal/animal product receipts. Crop receipts are forecast essentially unchanged from 2015. Nearly all major animal specialties — including dairy, meat animals, and poultry/eggs — are forecast to have lower receipts, including a 14.8% or $11.6 billion decline in cattle/calf receipts.

The slight gain in crop cash receipts is driven largely by a $5.3 billion increase in oil crop receipts, namely soybeans. While overall cash receipts are expected to decline, receipts for several commodities — including turkeys, rye, cotton (cotton lint), miscellaneous oil crops, and tobacco — are forecast to rise by 10% or more. To see the USDA’s annual forecast, click here.

GLOBAL COMPANIES SHIFTING R&D BUDGET TO SOFTWARE OFFERINGS
By 2020, companies will have shifted the majority of their R&D spending away from product-based offerings to software and service offerings, according to the 2016 Global Innovation 1000 Study from PwC’s strategy consulting business. The need to stay competitive is the top reason why companies cited a shift in their R&D budgets towards software and services, and for good reason – according to the study, companies who reported faster revenue growth relative to key competitors allocated 25% more of their R&D budgets to software offerings than companies who reported slower revenue growth.

To support the development of software and services offerings, fewer companies will focus their R&D spending on the electrical and mechanical field. By 2020, the number of companies reporting that electrical engineers are their top employed engineering specialty will fall by 35% and the proportion of companies who expect that data engineers will represent their largest group of employed engineers will double from 8% to 16%.

To view the comprehensive report, click here.

NATION’S MANUFACTURING SECTOR CONTINUES UP-AND-DOWN GROWTH
Economic activity in the nation’s manufacturing sector expanded in November to a 5-month high, and the overall economy grew for the 90th consecutive month, according to the monthly Purchasing Managers Index by the Institute for Supply Management.

The November PMI registered 53.2%, an increase of 1.3 percentage points from the October reading of 51.9%. A reading above 50% indicates that the manufacturing economy is generally expanding, while below 50% suggests a contraction.

Regionally, however, the manufacturing sector continues to experience weak to negative growth across a nine-state area stretching from Arkansas to North Dakota, according to the Creighton University Mid-America Business Conditions Index. The regional economic indication in November remained below growth neutral at 46.5, up from October’s 43.8 and the fifth straight month the index has moved below growth neutral 50.0. Arkansas’ overall index for November rose to 47.7 from 41.5 in October.