KSU economist Allen Featherstone worries that his state's farm incomes reflect more stress than USDA's national forecasts, in part because grain producers have failed to slash production costs enough to meet revenue shortfalls. (Source: KSU)

MANHATTAN, Kan. (DTN) -- Some Grain Belt analysts question USDA's latest 2016 farm income estimates as overly optimistic. They doubt growers were able to shed as much in input costs this season as USDA's revised August estimates indicated.

Kansas State University economist Allen Featherstone made that case at a joint KSU-Washburn Law School symposium last week. He painted a scenario more dire than USDA's aggregate farm numbers indicate, potentially setting the stage for hard choices when borrowers seek financing this winter.

Kansas farmers eked out a small profit last year: $4,500 was the average net farm income for Kansas farms, reported Featherstone, who heads the department of agricultural economics at KSU. That sounds only slightly better when you compare it to the Illinois Farm Business Farm Management Association numbers which showed the average Illinois farmer lost $2,971 last year. (For more details go to http://farmdocdaily.illinois.edu/…).

The 2015 income levels are all the more shocking, since average 2014 Kansas net farm income was $120,000.

In fact, last year was the lowest net farm income in Kansas since 1985, Featherstone said. "Besides prices going down, costs have come up. Commodity prices have fallen back to levels we saw between 2007-09. But cost of production has jumped 29% for soybeans, 17% for corn and 14% for wheat since 2009." By his count, non-irrigated Kansas corn producers spent an extra $171 per acre for corn and $162 per acre for soybeans than they did a decade earlier

Featherstone wasn't all doom and gloom. Farmers and ranchers have built up their equity compared to the 1980s, so will possess more staying power to weather tough times. In general, debt is low and interest rates are at historic low levels. However, repayment capacity is shrinking. In 2015 in Kansas, there was $4 in debt per $1 of earnings.

Repayment capacity numbers are a little alarming, he said. One hundred percent repayment capacity means you have cash available after paying farm expenses to pay debt, family living expense and taxes. Above 100% you have more than enough, below 100% means you can't cover family living expense, debt and taxes.