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Massive government payments drive forecast for increase in farm sector profits in 2020


This news story was published on September 8, 2020.
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Government payments to farmers are driving forecasts for 2020 profits higher.

WASHINGTON, D.C. – Billions of dollars in increased government payments (socialism) to farmers paint a rosy picture for farm sector profits in 2020, according to the USDA’s Economic Research Service.

Net farm income, a broad measure of profits, is forecast to increase $19.0 billion (22.7 percent) to $102.7 billion in 2020, after increasing in both 2018 and 2019. In inflation-adjusted 2020 dollars, net farm income is forecast to increase $18.3 billion (21.7 percent) from 2019. If realized, in inflation-adjusted terms, net farm income in 2020 would be 25.4 percent below its peak of $137.6 billion in 2013, but 13.8 percent above its 2000-19 average ($90.2 billion).

Net farm income could reach $102.7 billion in 2020, the highest since 2014, USDA’s Economic Research Service forecast on Wednesday. (Chart courtesy Economic Research Service)

Net cash farm income is forecast to increase $4.9 billion (4.5 percent) to $115.2 billion in 2020. Inflation-adjusted net cash farm income is forecast to increase $4.0 billion (3.6 percent) from 2019, which would be 5.7 percent above its 2000-19 average ($109.0 billion). Net cash farm income encompasses cash receipts from farming as well as farm-related income, including government payments, minus cash expenses. It does not include noncash items—including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings—reflected in the net farm income measure above.

Cash receipts for all commodities are forecast to decrease $12.3 billion (3.3 percent) to $358.3 billion (in nominal terms) in 2020. Total animal/animal product receipts are expected to decrease $14.3 billion (8.1 percent) with declines in receipts for broilers, cattle/calves, hogs, and milk. Total crop receipts are expected to increase $2.0 billion or 1.0 percent from 2019 levels. Higher receipts for fruit/nuts are expected to more than offset lower receipts for corn, wheat, cotton, and soybeans. Direct government farm payments are forecast at $37.2 billion in 2020, an increase of $14.7 billion (65.7 percent, in nominal terms). The expected increase is because of supplemental and ad hoc disaster assistance for COVID-19 relief.

Total production expenses (including operator dwelling expenses) are forecast to decrease $4.6 billion (1.3 percent) to $344.2 billion (in nominal terms) in 2020. Interest expenses and livestock/poultry purchases are expected to decrease, but fertilizer and cash labor expenses are expected to increase.

Farm business average net cash farm income is forecast to increase $3,800 (4.8 percent) to $82,600 per farm in 2020. All resource regions, except the Heartland and Prairie Gateway, are forecast to see farm business average net cash farm income increase. Farm businesses specializing in crops are expected to see average net cash farm income increase in 2020, while those specializing in cattle/calves, hogs, poultry, and dairy are expected to see average net cash farm income decrease in 2020.

Farm sector equity is forecast up by $18.5 billion (0.7 percent) in nominal terms to $2.68 trillion in 2020. Farm assets are forecast to increase by $33.7 billion (1.1 percent) to $3.11 trillion in 2020, reflecting an anticipated 1.1-percent rise in farm sector real estate value. Farm debt in nominal terms is forecast to increase by $15.2 billion (3.6 percent) to $433.8 billion, led by an expected 5.5-percent rise in real estate debt. The farm sector debt-to-asset ratio is expected to rise from 13.61 percent in 2019 to 13.95 percent in 2020. Working capital, which measures the amount of cash available to fund operating expenses after paying off debt due within 12 months, is forecast to decline 12.8 percent from 2019. When adjusted for inflation, farm sector equity is forecast to decline slightly in 2020, while assets and debt are forecast to increase.

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5 Responses to Massive government payments drive forecast for increase in farm sector profits in 2020

  1. Avatar

    Anonymous Reply Report comment

    September 10, 2020 at 9:55 pm

    It is sad that they are just little bitches in the big scheme of things.

  2. Avatar

    Anonymous Reply Report comment

    September 10, 2020 at 9:54 pm

    Iowa runs because of BIG AGRICULTURE. You government workers should understand that.

  3. Avatar

    Anonymous Reply Report comment

    September 9, 2020 at 6:23 pm

    What’s the difference between puppies and farmers? Puppies quit whining when they grow up.

  4. Avatar

    Anonymous Reply Report comment

    September 9, 2020 at 10:53 am

    Go to any new car dealer in Iowa. The back-ordered lists for new trucks is unbelievable. Guess who are buying them?

    • Avatar

      Anonymous Reply Report comment

      September 9, 2020 at 6:19 pm

      the people who need the deductions?