The USDA has announced it will pay $7 billion in "Agriculture Risk Coverage" and "Price Loss Coverage" (aka "subsidy") payments to farmers this year as prices for most agricultural products, particularly corn, have remained depressed. At $7BN, subsidy payments will be equal to roughly 10% of the USDA's forecast for aggregate farm income in 2016. Farm subsidies this year are up 35% versus the $5.2BN paid under the ARC/PLC programs last year.

While farmers of many different agricultural commodities receive support payments, as you can see from the payments by crop type made last year, the overwhelming majority of farm subsidies go to Midwest corn farmers.

Of course, subsidy payments have risen as corn futures have collapsed over 55% from their 2012 peak.

As a reminder, here is a quick recap of the overall financial health of America's farmers. Real farm incomes in 2016 are expected to sink below 2010 levels which represents a 34% decline from the recent peak and 14% decline YoY.

Meanwhile farm debt continues to rise at an astonishing rate...

While farmer leverage has spiked to the highest level since the early 80s.

And of course, lower incomes means less money to spend on shiny new John Deere tractors with equipment capex expected to decline 31% YoY.

And finally, farmer returns have crashed to the lowest levels ever. We're not sure about you but a 2% ROIC seems a "little low" even in our current rigged interest rate environment. So, there's only a couple of ways to fix that problem...either commodity prices have to recover quickly or farmland prices need to come down substantially. Which do you think will happen first?