Net Farm Income Forecast to Raise in 2020

Oct 16, 2020  | 3 min  | Ep4609

As farmers make their way through their fields, candidates are making their cases for elected office. Usually, a reelection theme center’s on “are you better off than you were four years ago?”

One answer to that question includes how farm incomes are changing.

John Torpy has more.

 
Data from USDA’s Economic Research Service is forecasting net farm income to rise in 2020.
      Despite trade disruptions and economic upheaval due to the coronavirus pandemic, farm incomes are predicted to grow by 22 percent from 2019 levels to reach $102.7 billion.
Dr. Todd Kuethe, Purdue University: ”This isn't like the income statement for a single farm. It's not like accounting. It's more like GDP. So it's a big measure of what is the value that the farm sector is providing to the economy. ” 
 
      According to data from the consulting firm Agricultural Economic Insights, direct farm payments will make up 36 percent of net farm income in 2020. Even as the USDA numbers march upward, overall, income levels are down when compared to the highs of almost a decade earlier. In 2013, farm income totals rang the bell at just over $137 billion when a drought was gripping more than 30 percent of the lower 48 states.
      Kuethe says, data collected from this year’s harvest will make its way into income forecasts further down the road. He also stresses the next set of calculations will include the Midwest Derecho, western wildfires and a looming drought. While farm income is predicted to rise, cash receipts for all commodities in 2020 are predicted to slide just over three percent to $358.3 billion. 
Dr. Todd Kuethe, Purdue University: “For example, the next one that's coming out is in December, on December 2nd, if we have a huge trade event or a huge weather event on the last couple of days after Thanksgiving, that won't show up yet into that forecast, because it hasn't shown up into the data that the USDA collects.” 
 
      Reports next year also will include data from MFP payments issued to offset the trade war along with PPP and CFAP financial relief dispersed due to the COVID-19 pandemic. 
      Kuethe says the tools used by the USDA tend to run on a conservative slope, leaving room for some good news for agriculture in 2020.
Dr. Todd Kuethe, Purdue University: “From February to September, the forecast for the U.S. improved by about five percent. Um, so it's gotten increasingly optimistic. So they're, they're showing a turn in expected farm income. So, uh, for example, um, with, with cash income, they're expecting it now to be 22 percent above what it was in 2019. So it's quite a rebound, um, but even more importantly, it's a 5 percent increase from what they expected in February.”
 
      For Market to Market, I’m John Torpy
 
Producer Contact torpy@iowapbs.org, @TVTorpy on twitter
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