The U.S. Department of Agriculture (USDA) is expecting overall net farm income to decline in 2021. In the 2021 Farm Sector Income Forecast USDA’s Economic Research Service is forecasting a decrease of $9.8 billion from 2020. The expected decline represents an 8.1 percent drop from the previous year, to a total of $111.4 billion for 2021. Despite an overall decrease in income, USDA expects cash receipts to increase more than five percent to $20.4 billion.
The decline from 2020 levels was expected after a year of significant federal support for farmers and ranchers. Relief payments to the farm sector helped push 2020 net farm income levels to the highest they have been in six years. Direct Government farm payments are expected to decrease by 45.3 percent this year. USDA is expecting significantly lower levels of supplemental and ad hoc disaster assistance to be provided compared to 2020. Lower payments from the Coronavirus Food Assistance Program and the Paycheck Protection Program are expected to bring levels down to $15.6 billion.
Despite the forecasted decline, 2021 net farm income should still be well above the average between 2000 and 2019. Over that period the average net farm income has been $92.1 billion. The projected income level would make 2021 one of the top-six most successful years since 2000. Net cash farm income would also be significantly higher than the average even when adjusting for inflation. A decline of 7.5 percent in net cash farm income will still equate to $128.3 billion.
An increase in prices and quantities is expected to help improve cash receipts in 2021. Cash receipts for corn and soybeans are expected to be the highest in five years. The increase will offset the declines in cash receipts for fruits, nuts, vegetables, melons, and cotton. Cattle, calves, hogs, and broilers are also projected to have higher cash receipts compared to 2020.
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