With the announcement of our first quarter earnings, John Deere has started the year on a positive note and done so in the continued face of soft market conditions. Though earnings were somewhat lower than last year, all of our businesses remained solidly profitable. Some of the factors helping our performance in the quarter included sound execution, a broad product portfolio and the impact of a more flexible cost structure. At the same time, we are seeing encouraging signs that after several years of steep declines our key agricultural markets may be stabilizing. Partly as a result, we raised our full year forecast for sales and earnings.
Now let's take a closer look at our first quarter results in detail beginning on slide three. Net sales and revenues were up 2% to $5.6 billion. Net income attributable to Deere & Company was $194 million. EPS was $0.61 in the quarter.
Our equipment operations effective tax rate was 50% in the first quarter due largely and unfavorable discrete items. It is worth noting the effective tax rate of the equipment operations in the first quarter of 2016 was 20%. That reflected a benefit from a permanent extension of the R&D tax credit and other favorable adjustments. On slide four, total worldwide equipment operations net sales were down 1% to $4.7 billion.
Price realization in the quarter was positive by 2 points. Currency translation was positive by 1 point.
Turning to a review of our individual businesses, starting with Agriculture & Turf on slide five. Net sales were flat in the quarter-over-quarter comparison. Lower shipment volumes and higher warranty costs were offset by price realization and the favorable effect of currency translation.
Operating profit was $213 million, up from $144 million last year. Ag & Turf operating margins were 5.9% in the quarter. The increase in operating profit was driven primarily by a gain on sale of a partial interest in SiteOne Landscape Supply, Inc. and price realization. These were partially offset by voluntary separation expenses, higher warranty costs and the unfavorable effects of foreign currency exchange. The gain on sale of a partial interest in SiteOne Landscape Supply contributed nearly 3 points of operating margin in the quarter, while expenses related to the voluntary separation program lowered margins by nearly 2 points. Excluding these impacts, operating margins were about 1 point higher than in last year's first quarter. Before we review the industry sales outlook, let's look at fundamentals affecting the Ag business.
Slide six outlines U.S. farm cash receipts. Given the large crop harvest and consequently the lower commodity prices we're seeing today, our 2016 forecast calls for cash receipts to be down about 5% from 2015's levels.
Moving to 2017, we expect total cash receipts to be about $367 billion, roughly flat with 2016. It is worth noting that net farm cash income, a good measure of farm business health, is forecast to be up slightly in 2017. You can see this information in the appendix.
On slide seven, global grain and oilseed stocks-to-use for ratios are forecast to remain at elevated but generally unchanged levels in 2016, 2017 as abundant crops are mostly offset by strong demand around the world. Chinese grain and oilseed stocks continued to increase in 2016 with supply, domestic production plus imports outpacing the demand. Chinese stocks of grains and oilseeds now represent almost half of the world's stocks. Remember, these Chinese stocks are unlikely to be exported. That means the world market, particularly oilseeds remain sensitive to any production setbacks, major geopolitical disruptions or trade disputes. World cotton stocks have now fallen for a second consecutive season to the lowest level in five seasons. This reflects lower planting and stronger global demand. Our economic outlook for the EU28 is on slide eight. Economic growth in the region is improving at a moderate pace, though geopolitical risks such as Brexit and populist sentiment remain elevated, as does currency volatility. Farm income remains below the long-term average due to high global grain stocks and last year's poor harvest in the Northwest EU, particularly France. The diary market is seeing early signs of recovery as prices are forecast to return to average levels after many years of decline. Sentiment and margins are expected to improve throughout 2017. Shifting to Brazil on slide nine. The chart on the left displays the crop value of agricultural product, a good proxy for the health of Agri business in Brazil. Ag production is expected to increase about 8% in 2017 in U.S. dollar terms due to record acreage expansion in yield expectations. In local currency, the value of production is forecast to be up about 3%. Profitability for Brazilian farmers remains at good levels as crops are sold in dollars. On the right side of the slide, you will see eligible rates for Ag-related government-sponsored finance programs. Rates for Moderfrota remain at 8.5% for small and mid-size farmers and 10.5% for large farmers. Importantly, the overall budget for Moderfrota has been raised by nearly 50% from the initial R$5 billion to R$7.5 billion. This demonstrates the government's ongoing commitment to Agriculture and is driving continued improvement in farmer confidence. Our 2017 Ag & Turf industry outlooks are summarized on slide 10. Industry sales in the U.S. and Canada are forecast to be down 5% to 10%, with the effects being felt in both large and small models of equipment, particularly affected our products used in the livestock sector such as mid-sized tractors and hay and forage tools. Still, there are signs the large Ag market is nearing bottom. For example, the magnitude of the industry decline expected in 2017 is considerably less than that experienced in 2016. Also, the used equipment environment is stabilizing.
The EU28 industry outlook is forecast to be down about 5% in 2017, due to low crop prices and farm incomes as well as the geopolitical risks mentioned earlier. In South America, industry sales of tractors and combines are now projected to be up 15% to 20% in 2017. This is a reflection of improved confidence, slowing inflation, and lower benchmark interest rates in Brazil as well as positive industry sentiment in Argentina. Shifting to Asia, sales are expected to be flat to up slightly, with growth in India being the main driver.
Turning to another product category, industry retail sales of turf and utility equipment in the U.S. and Canada are projected to be roughly flat in 2017, with Deere sales outpacing the industry. Putting this all together, on slide 11, fiscal year 2017 Deere sales of worldwide Ag & Turf equipment are now forecast to be up about 3%. The forecast change is a result of sales improving in all regions of the world, most notably in South America. The Ag & Turf division's operating margin is forecast to be about 9% in 2017, roughly in line with 2016. Now let's focus on Construction & Forestry on slide 12.
Net sales were down 6% in the quarter as a result of lower shipment volumes and higher sales incentive costs. Operating profit was $34 million in the quarter, down from $70 million last year. Lower results were driven mainly by higher sales incentive costs and the voluntary separation program. C&F operating margins were 3.1% in the quarter. Expenses related to the voluntary separation program were incurred as expected in the quarter, creating a nearly 1.5-point headwind to operating margins.
Moving to slide 13, looking at the economic indicators affecting the construction and forestry industries, there was a slight improvement in the fundamentals. GDP growth is positive, job growth continues, construction spending is up from 2016 levels, and housing starts are expected to exceed 1.2 million units this year. Construction investment in oil and gas activity improved in the fourth quarter of calendar 2016 after seven quarters of decline, while residential and commercial institutional construction continued to increase moderately. Machinery rental utilization rates have made slight improvements after multiple quarters of deterioration, and forward-looking sentiment has improved with the prospect for higher infrastructure spending. On the other hand, used inventory for the industry remains above normal levels and rental rates are still soft. Also, economic growth outside the United States, particularly in Latin America, is sluggish. All in all, our outlook on the construction industry is cautiously optimistic.
Moving to the C&F outlook on slide 14, Deere's Construction & Forestry sales are now forecast to be up about 7% in 2017, largely driven by production moving closer to retail demand. The forecast for global forestry markets is flat to down 5%, a result of lower sales in the U.S. and Canada. C&F's full-year operating margin is now projected to be about 5%.
Let's move now to our Financial Services operations. Slide 15 shows the provision for credit losses as a percent of the average owned portfolio. At the end of January, the annualized provision for credit losses was 8 basis points, reflecting the continued excellent quality of our portfolios. The financial forecast for 2017, shown on the slide, contemplates a loss provision of 29 basis points, unchanged from the previous forecast. This will put losses just above the 10-year average of 26 basis points and below the 15-year average of 34 basis points.
Moving to slide 16, Worldwide Financial Services net income attributable to Deere & Company was $114 million in the quarter versus $129 million last year. The lower results were primarily due to less favorable financing spreads and expenses related to the voluntary separation program. 2017 net income attributable to Deere & Company is forecast to be about $480 million, unchanged from our previous forecast. Slide 17 outlines receivables and inventories. For the company as a whole, receivables and inventories ended the quarter down $461 million. We expect to end 2017 with total receivables and inventory down about $200 million, with reductions being made by both equipment divisions. With respect to North American large Ag field inventories, Deere inventories as a percent of rolling total sales are roughly half of those of the rest of the industry. As an example, at the end of December, the inventory-to-sales ratio for Deere two-wheel drive tractors of 100-horsepower plus was 37%, while the industry less Deere was 81%.
Slide 18 shows cost of sales as a percent of net sales. Cost of sales for the first quarter was 80.8%, which included the impact of the voluntary separation program costs. Our 2017 cost of sales guidance is about 78% of net sales, unchanged from the last quarter.
When modeling 2017, keep these unfavorable impacts in mind: an unfavorable product mix; emissions costs; voluntary separation expenses; and overhead spend. On the favorable side, we expect price realization of about 1 point. Now let's look at some additional details.
With respect to R&D on slide 19, R&D was down 3% in the first quarter, including the cost associated with the voluntary separation program. Our 2017 forecast calls for R&D to be down about 2%.
Moving to slide 20, SA&G expense for the quarter for the equipment operations was up 12%, with the main drivers being the voluntary separation program expenses and commissions paid to dealers, which result from direct sales to customers. Our 2017 forecast contemplates SA&G expense being up by about 5%. More than half of the full-year change is expected to come from voluntary separation expenses and commissions to dealers.
Turning to slide 21, the equipment operations tax rate was 50% in the first quarter, primarily due to discrete items, as noted earlier. For 2017, the full-year effective tax rate forecast remains in the range of 33% to 35%. Slide 22 shows our equipment operations history of strong cash flow. Cash flow from the equipment operations is now forecast to be about $2.6 billion in 2017. The company's financial outlook is on slide 23.
Net sales for the second quarter are forecast to be up about 1% compared with 2016. This includes about 2 points of price realization. Our full year outlook now calls for net sales to be up about 4%, which includes about 1 point of price realization. Finally, our full year 2017 net income forecast is now about $1.5 billion. In closing, John Deere continues to perform far better than in agricultural downturns of the past.
And our first quarter results provide further evidence of that fact. This is due in large part to our ongoing success developing a more durable business model and a wider range of revenue sources. In addition, our efforts to improve operating efficiency are gaining traction and we remain confident we can deliver at least $500 million of structural cost reductions by the end of 2018. All of this reinforces our belief that Deere is well positioned to deliver significant value to our customers and investors in the future.