Wallaces Farmer

Direct payments boost net farm income 43%

USDA Economic Research Service releases latest information on farm income, which shows direct government payments more than doubled year-over-year.

Janet Kubat Willette, E-Content Editor

December 3, 2020

3 Min Read

Direct government payments to farmers and ranchers are forecast to increase 107% from 2019 to 2020, according to the latest data from USDA's Economic Research Service.

All payments in 2020 are forecast at $32.6 billion, with $11 billion coming from the first Coronavirus Food Assistance Program and $13.3 billion coming through the second CFAP. Also included are $5.9 billion in PPP loans, which will be forgiven in requirements are met, and other payments at $2.4 billion.

Total Direct Payments To Farmers


USDA released its latest Farm Income and Financial Forecasts on Dec. 2, factoring in the November World Agriculture Supply and Demand Estimates and other data. The forecast covers about 2 million farms who operate about 900 million acres of land.

With the boost in government aid, which is on top of the 64% increase in 2019, farmers are projected to see a 43% increase in net farm income in 2020. Net farm income is money made or lost through operation of a farm. Net cash farm income is forecast to increase almost 23%. Net cash farm income includes cash receipts from farming as well as farm-related income and government payments, less cash expenses.

"This is despite an expected decline from cash receipts from commodity sales," said Carrie Litkowski, USDA ERS senior economist and farm income team leader. "Cash receipts are expected to decline about 1% in 2020. Much of the increase is coming from the direct government payments, which are forecast to increase $24 billion in 2020, more than doubling. Also contributing to the increase are total production expenses, which are forecast to decline about 1 and a half percent.

"On the farm sector balance sheet, assets and debt are both forecast to increase, with overall equity rising by about 1%," Litkowski said.

These figures are not adjusted for inflation, she said. When dollars are adjusted for inflation, net cash farm income is forecast to increase 21% to $134 billion, which is the highest level since 2014. Net farm income is forecast to increase 41% or $35 billion, to $119.6 billion, which is the fourth consecutive increase in net farm income and the highest level since 2013.

In 2020, total cash receipts are forecast to decrease $2.6 billion and lower quantities sold are expected to decrease income by another $1 billion, Litkowski said.

Cash receipts


The crop and livestock cash receipts are very different, she said. Crop prices are expected to rise and lead to higher cash receipts in 2020 for crops, but livestock producers are expected to have lower receipts.

The crops with the highest increases are fruits and nuts, which is forecast to increase 16.1%. Soybeans cash receipts are forecast to increase 7.5% due to higher prices following declines in the prior three years, and vegetables and melon cash receipts are forecast to increase 3.7%. Corn cash receipts are forecast to decrease 5% due to lower prices and quantities.

Livestock and livestock product cash receipts are forecast to decrease due to lower prices, Litkowski said. Broilers are forecast to see the largest decrease at 23.7%. Eggs, on the other hand, are forecast to increase at 16.1%.

Find more information on farm sector income and finances.

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