2021 Farm Sector Income Forecast, December

The USDA’s Economic Research Service (ERS) indicated on Wednesday that, “Net farm income, a broad measure of profits, is forecast to increase by $22.0 billion (23.2 percent) from 2020 to $116.8 billion in 2021. This expected increase follows a forecast increase of $15.7 billion (19.9 percent) in 2020.”

“After increasing by $9.2 billion (8.6 percent) in 2020, net cash farm income is forecast to increase by $17.0 billion (14.7 percent) to $133.0 billion in 2021.”

If realized, net farm income in 2021 would be at its highest level since 2013; net cash farm income would be at its highest level since 2014 (in real terms).

ERS pointed out that, “Total crop receipts are forecast to increase by $35.4 billion (17.9 percent) from 2020 levels to $233.0 billion. When combined, corn, soybean, and wheat receipts are forecast to increase by $35.3 billion (36.4 percent) in 2021, accounting for almost all the forecasted growth in crop cash receipts.”

Wednesday’s update stated that, “Corn receipts are forecast to increase by $24.4 billion (52.4 percent) in 2021, caused by higher expected prices and quantities. Soybean receipts in 2021 are expected to increase $8.6 billion (20.8 percent), because of forecasted growth in prices.”

ERS pointed out that, “USDA pandemic assistance for producers, including the Coronavirus Food Assistance Program (CFAP), provides relief to producers whose operations are directly affected by COVID-19. Payments in calendar year 2021 from these USDA programs are forecast at $8.0 billion. In 2020, producers received $23.5 billion in CFAP payments.

“Non-USDA pandemic assistance (payments from the Paycheck Protection Program (PPP), administered by the Small Business Administration), is forecast at $8.7 billion for 2021, compared with $6.0 billion in 2020.”

“Farm bill commodity payments in calendar year 2021 under the Agriculture Risk Coverage (ARC) program are expected to be $95 million, a decrease of $1.2 billion from 2020 levels. Price Loss Coverage (PLC) payments in 2021 are expected be $2.1 billion, a decrease of $2.8 billion from 2020 levels.”

“Conservation payments from the financial assistance programs of USDA’s Farm Service Agency and Natural Resources Conservation Service are expected to be $4.0 billion in 2021, up 3.9 percent from 2020.”

With respect to production expenses, ERS noted that, “Farm sector production expenses—including expenses associated with operator dwellings—are forecast to increase by $29.8 billion (8.3 percent) from the previous year in nominal terms to $387.6 billion in 2021.”

More narrowly, ERS pointed out that, “Feed expenses, the largest single expense category, are forecast to increase in 2021 by $7.6 billion (13.4 percent) in nominal terms to $64.4 billion, because of higher prices for feed commodities.”

“Fertilizer-lime-soil conditioner expenses are forecast to increase by $3.1 billion (12.5 percent) in nominal terms in 2021 to $27.5 billion.”