U.S. net farm income is expected to decline in 2014 because of a sharp decline in crop prices, according to a new report released last week. But the U.S. Department of Agriculture (USDA) tempered its projection for a sharper falloff this year because of strong livestock prices, expected high yields and a sell-off of grain inventories, economists said.

"I guess the only surprise is that it’s not as bad as what the USDA predicted back in February," said Dave Miller, Iowa Farm Bureau Federation director of research and commodity services.

Profit margins for farmers are definitely much tighter than they have been in the past few years, said Nathan Kaufmann, who heads the Omaha branch of the Kansas City Federal Reserve Bank. "But I ...