The September 2020 Farm Income Forecast from the U.S. Department of Agriculture’s (USDA) Economic Research Service demonstrates another big year for farm sector profits. USDA is forecasting net farm income to increase nearly 23 percent over last year, to $102.7 billion in 2020. The projected increase comes despite the challenges created by COVID-19 with lower commodity prices and trade complications. The forecast details how critical government payments have been for the industry in offsetting depressed market conditions.
USDA notes that farm cash receipts are expected to decrease by $12.3 billion this year and total animal and animal product receipts are forecast to decline $14.3 billion. Total receipts for soybeans, corn, wheat, and cotton are projected to decrease, while receipts for fruits and nuts are expected to increase. At the same time, net farm income is projected to increase by nearly 22 percent in inflation-adjusted 2020 dollars and net farm income is also expected to increase close to four percent. That would put the numbers above the historical average over the past 20 years if they come to fruition.
The increase in farm sector profits are largely attributable to government payments in response to turmoil created by COVID-19. USDA indicates that direct government farm payments are expected to reach $37.2 billion, an increase of nearly 66 percent. According to an economist with the Kansas City Federal Reserve, government payments could represent up to 40 percent of farm income for 2020. If that is realized, it would be the highest level in nearly 20 years.
Supplemental and ad hoc disaster assistance payments primarily coming from payments through the Coronavirus Food Assistance Program and the Paycheck Protection Program are forecast to reach $23.4 billion in 2020. The figure represents an increase of $22 billion over 2019 levels. Farm sector profits could be further affected as Congress considers providing additional support for the industry.
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