On Sept. 2, the U.S. Department of Agriculture’s Economic Research Service released the Farm Sector Income Forecast report. Overall, the report shares promising data for farmers in 2021.
This report includes data spanning the entire farm sector, which includes 2 million farms, over 965 farm business and more than 6 million people living in farm households.
Farm sector profits have been trending upward since 2016. Net farm income, used as a broad measure of profits, is forecast to climb 19.5% higher than in 2020 for a total of $113.0 billion.
Based on forecasts, 2021 will have the highest single-year increase for cash receipts since 2007, according to the USDA. This increase is driven primarily from commodity sales, says Carrie Litowski, economist for USDA-ERS.
According to Litowski, other important measures for farm sector health include assets, equity and debt. The report forecasts assets and equity to increase by 2.5% and 2.9% respectively, while debt is expected to decrease slightly by 0.2%. This is the first time since 2012 that debt is forecasted to decrease.
ERS forecasts crop cash receipts to grow to $230.1 billion, a 19.7% increase over 2020. If the forecast is realized, it will be the highest level of crop cash receipts since 2012.
Corn, soybean and wheat revenue are expected to increase, largely due to higher commodity prices and more crops sold, according Carrie Litowski. Income from vegetables and fruits and nuts are expected to fall lower for 2021, following trends in previous years.
Cash receipts for animals and animal products are also expected to see a spike of 16% over 2020. Hogs stand out with the highest increase, as increased prices are expected to drive revenue 43.7% higher than 2020. However, the dairy income forecast actually shows a decrease of 3% for 2021.
Government farm payments
Another noteworthy takeaway from this report is the forecasted decrease in government farm payments. The report shows a significant dip compared to 2020, but forecasts are still the highest since 2005, excluding last year. Changes include:
- Supplemental and ad hoc disaster assistance forecast to decrease $10.6 billion from 2020
- Agriculture Risk Coverage program expected to be $6.7 million, $1.3 billion less than 2020
- Dairy Margin Coverage Program expected to increase to $0.8 billion
- Conservation payments expected to land at $4.0 billion
- Market Facilitation Program sees no new payments for 2021
Total production expenses, including expenses associated with operator dwellings, are forecast to increase by 7.3% in 2021 to $383.5 billion. Nearly all expense categories are forecast to be higher in 2021, with feed, livestock and poultry purchases showing the largest dollar increase. Pesticides are the only expense category expecting a decrease this year compared to last year.
“If this forecast is realized, production expenses would be the highest since 2016 yet below the 2014 peak in inflation-adjusted terms,” the report says.
Get more information on this report from USDA. The third and final Farm Sector Income Forecast report for 2021 will be released Dec. 1, 2021.