On Wednesday, the Federal Reserve Board released its January 2021 Beige Book update, a summary of commentary on current economic conditions by Federal Reserve District. The report included several observations pertaining to the U.S. agricultural economy.
The USDA’s Economic Research Service (ERS) indicated on Wednesday that, “Net farm income, a broad measure of profits, is forecast to increase $36.0 billion (43.1 percent) from 2019 to $119.6 billion in 2020.
“Net cash farm income is forecast to increase $24.7 billion (22.6 percent) to $134.1 billion. In inflation-adjusted 2020 dollars, net farm income is forecast to increase $35.0 billion (41.3 percent) and net cash farm income is forecast to increase $23.4 billion (21.1 percent).
If realized, both income measures would be well above their historical average across 2000-19 when adjusted for inflation and at their highest levels since 2013 and 2014, respectively.
ERS pointed out that, “Direct Government farm payments, which include Federal farm program payments paid directly to farmers and ranchers but exclude USDA loans and insurance indemnity payments made by the Federal Crop Insurance Corporation, are forecast at $46.5 billion, a $24.0 billion (107.1 percent) increase. The expected increase is largely because of supplemental and ad hoc disaster assistance for the coronavirus (COVID-19) pandemic.”
Wednesday’s update stated that, “Supplemental and ad hoc disaster assistance payments in 2020 are forecast at $32.4 billion, an increase of $31.0 billion from 2019, mainly from payments from the Coronavirus Food Assistance Programs (CFAP1 and CFAP2) and the Paycheck Protection Program (PPP).”
“Market Facilitation Program payments to aid farmers in response to trade disruptions are expected to decline $10.5 billion from 2019 levels. The 2020 forecast of $3.7 billion reflects payments authorized in 2019 but paid in 2020.”
ERS added that, “Payments in calendar year 2020 under the Agriculture Risk Coverage (ARC) program are expected to increase $0.4 billion from 2019 levels while Price Loss Coverage (PLC) payments in 2020 are expected to increase $3.1 billion from 2019 levels.”
With respect to crop receipts, the update stated that, “Soybean receipts in 2020 are expected to increase $2.6 billion (7.5 percent) in nominal terms, as higher prices should outweigh the effect of lower quantities relative to 2019. Corn receipts are expected to fall by $2.5 billion (5.1 percent) in 2020, because of lower forecasted prices and quantities.”
Wednesday’s update also provided a perspective on farm household income, and stated that, “Farm households typically receive income from both farm and off-farm sources. Median farm income earned by farm households is forecast to increase in 2020 to $1,187 from $297 in 2019.”
“As in previous years, many farm households rely on off-farm income—the median is forecast to decrease in 2020, down 1.6 percent to $67,950 from $68,750 in 2019. This reflects estimated lost employment and wage income because of the coronavirus pandemic, which is partially offset by estimated Economic Impact Payments received by most U.S. households in response to the pandemic.”