Farmer Expected to End 2020 With Higher Profit Compared to 2019

Saturday, January 2nd, 2021 -- 8:00 AM

(AP) Thanks to the government paying nearly 40% of their income, U.S. farmers are expected to end 2020 with higher profit than 2019 and the best net income in seven years, the Department of Agriculture said in its latest farm income forecast.

Farmers faced challenges throughout 2020 that included the impact of trade disputes; low prices that drove down cash receipts for corn, cotton, wheat, chicken, cattle and hogs; and weather difficulties such as drought in some areas and an unusual August wind storm stretching from South Dakota to Ohio that centered on Iowa.

Farm cash receipts are forecast to decrease nearly 1% to $366.5 billion, the lowest in more than a decade, measured in real dollars. Direct federal government payments saved farmers’ bottom line: Farmers overall saw a 107% increase in direct payments from 2019, when a third of net income came directly from the government.

The impact of the money varies from one farm to another, depending on whether a farmer owns the land, has significant capital to draw from, has manageable debt and aggressively manages wide commodity price swings.

Excluding USDA loans and insurance indemnity payments made by the Federal Crop Insurance Corporation, farmers are expected to receive $46.5 billion from the government, the largest direct-to-farm payment ever.

That includes $32.4 billion in assistance through coronavirus pandemic relief food assistance and Paycheck Protection Program payments to farmers. Additional support comes from more traditional revenue loss programs due to low commodity prices, compensation for trade disruptions resulting from tariff battles and conservation programs assistance.

Federal court bankruptcy data indicates 433 U.S. farms filed for reorganization as of Sept. 30, down from 454 during the same period the previous year.  Overall, net farm income in the United States is expected to increase 43% from 2019 to $119.6 billion, the USDA estimated. Farmers will see the highest level of net farm income, a broad measure of profitability, since 2013, the agency said.

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