Net Farm Income

Net Farm Income

David Sparks Ph.D.
David Sparks Ph.D.
Most agricultural economists and policy wonks saw this coming. USDA’s September 2020 farm income projections suggested net farm income (a broad measure of farm profitability across the entire farm sector) would reach $103 billion this year, up 23% from the prior year and the highest level since 2013’s record high.

That was before the second $14 billion Coronavirus Food Assistance Program and before new crop inventories began to shrink as the outlook for U.S. agricultural exports improved, i.e., China and Phase 1. Assuming those export sales are realized, USDA’s December 2020 Farm Income Forecast confirmed what many expected -- nominal net farm income in 2020 will reach nearly $120 billion, up 43% from 2019 and the second-highest of all time. Yet, farm cash receipts from crop and livestock sales are down $3 billion and the lowest since 2016. Today’s article reviews USDA’s most recent farm income projections.

While farm profitability will certainly be higher in 2020, it’s a false positive. Farm cash receipts from the sales of all crop and livestock commodities are now projected at $367 billion, down $3 billion, or 1%, from 2019. Cash receipts this year will be the lowest since 2016 and they remain $57 billion less than the $424 billion in cash receipts received during 2014. There has been some relief in production expenses, which, at a projected $344 billion, are down $5 billion, or 1%, from 2019 and the lowest since 2011.

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