The U.S. Department of Agriculture (USDA) Economic Research Service (ERS) is predicting the highest net farm income in nearly a decade. In the December 2020 Sector Farm Income Forecast, USDA-ERS forecasts net farm income to hit $119.6 billion this year. That number represents an increase of more than 43 percent over 2019 totals. Net cash farm income is also predicted to increase nearly 23 percent, to $134.1 billion in 2020. If the predictions come to pass, it would mean both income measures are well above the historical average over the last 19 years.
Net farm income is a broad measure of profits. Net cash farm income includes cash receipts from farm production, along with other farm-related income that includes government payments. Figures for net farm income have been steadily increasing since 2016, with 2020 showing substantial growth from the year prior. The highest net farm income over the past 20 year came in 2013 when it was $123.8 billion. The numbers can be somewhat surprising given the challenges agriculture has faced in 2020.
USDA-ERS reports that direct government farm payments increased more than 107 percent in 2020, to a total of $46.5 billion. That figure includes federal farm program payments that are made directly to producers. USDA loans and insurance indemnity payments made by the Federal Crop Insurance Corporation are not included in the figure. Supplemental and ad hoc disaster assistance related to COVID-19 is largely responsible for the expected increase.
Increased government payments are projected to offset declines in cash receipts. Cash receipts for all commodities are forecast to decrease by $3.2 billion. A decline of $9.7 billion in overall cash receipts for livestock producers is also expected. The increase in government payments along with increases in crop cash receipts more than offset the decline in other sectors. Total crop receipts are expected to increase by $6.5 billion, led by fruit, nuts, and soybeans.
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