2021 Farm Sector Income Forecast, February

The USDA’s Economic Research Service (ERS) indicated on Friday that, “Net farm income, a broad measure of profits, is forecast to decrease $9.8 billion (8.1 percent) from 2020 to $111.4 billion in 2021. This expected decline follows a forecast increase of $38 billion (45.7 percent) in 2020.

“After increasing $27.3 billion (25.0 percent) in 2020, net cash farm income is forecast to decrease $7.9 billion (5.8 percent) to $128.3 billion in 2021. In inflation-adjusted 2021 dollars, net farm income is forecast to decrease $12 billion (9.7 percent) and net cash farm income is forecast to decrease $10.4 billion (7.5 percent).

If realized, both income measures would remain above their historical average across 2000-19 even after adjusting for inflation.

ERS pointed out that, “After reaching a record high in 2020, direct Government farm program payments are forecast to decrease 45.3 percent ($21 billion) to $25.3 billion in 2021. This overall decrease reflects lower anticipated payments from supplemental and ad hoc disaster assistance, mainly direct payments for COVID-19-related assistance.”

Friday’s update stated that, “Supplemental and ad hoc disaster assistance payments in 2021 are forecast at $15.6 billion, a decrease of $16.5 billion from 2020, mainly because of lower payments from the Coronavirus Food Assistance Program and the Paycheck Protection Program (PPP).”

“Additional COVID-19-related aid to farmers in 2021 is expected to come from the Consolidated Appropriations Act, 2021 signed into law in December 2020. The total direct payments to farmers and ranchers under this legislation is forecast at $8 billion in 2021 and are recorded under supplemental and ad hoc disaster assistance. This amount may be revised as more information becomes available.”

ERS added that, “Payments in calendar year 2021 under the Agriculture Risk Coverage (ARC) program are expected to decrease $1.3 billion from 2020 levels while Price Loss Coverage (PLC) payments in 2021 are expected to increase $0.4 billion from 2020 levels.”

With respect to crop receipts, the update stated that, “Soybean receipts in 2021 are expected to increase $9.4 billion (24.3 percent), because of forecasted growth in both prices and quantities sold. Similarly, corn receipts are forecast to increase by $6.7 billion (14 percent) in 2021, caused by higher expected prices and quantities.”

Friday’s update also included additional information related to Assets, Debts and Wealth, and stated that, “The farm sector debt-to-asset ratio and debt-to-equity ratio are expected to continue their slow increases from 2012, forecast at 13.89 and 16.13 percent.”