USDA forecasts 2021 farm income

According to the U.S. Department of Agriculture’s February 2021 Farm Income Forecast, net farm income, a broad measure of profits, is forecast to decrease $9.8 billion (8.1%) to $111.4 billion in 2021. In inflation-adjusted 2021 dollars, net farm income is forecast to decrease $12 billion (9.7%) in 2021 after increasing $37.8 billion (44.2%) in 2020 to its highest level since 2013. Despite this decline, 2021 net farm income would be 21% above its 2000-19 average of $92.1 billion.

The forecast predicts that overall, farm cash receipts are forecast to increase $20.4 billion (5.5%) to $390.8 billion in 2021 in nominal dollars. Total animal/animal product receipts are expected to increase $8.6 billion (5.2%) following increases in receipts for cattle/calves, hogs, and broilers. Total crop receipts are forecast to increase $11.8 billion (5.8%) from 2020 levels. When combined, soybean and corn receipts are forecast to increase $16.1 billion (19%) in 2021, more than offsetting declines in fruits/nuts, vegetables/melons, and cotton.

Direct government farm payments are forecast at $25.3 billion in 2021, a $21 billion (45.3%) decrease from 2020. Direct Government farm payments include Federal farm program payments paid directly to farmers and ranchers but exclude USDA loans and insurance indemnity payments made by the Federal Crop Insurance Corporation. Most of this decline is because of lower supplemental and ad hoc disaster assistance to farmers and ranchers for the coronavirus (COVID-19) pandemic compared with 2020.

Total production expenses, including expenses associated with operator dwellings, are forecast to increase $8.6 billion (2.5%) in 2021 to $353.7 billion. Expected higher spending in 2021 on feed, fertilizer, and labor is the greatest contribution to this increase.

Farm sector equity is expected to increase by 1.8% to $2.74 trillion in nominal terms, a decline of 0.1% after adjusting for inflation. Farm sector assets are forecast to increase 1.8% in 2021 to $3.18 trillion following increases in farm real estate. When adjusted for inflation, total assets are nearly unchanged from 2020. Farm sector debt is forecast to rise 2.2% to $441.7 billion, with real estate debt forecast to rise 3.1%. Debt-to-asset levels for the sector have been trending higher since 2012 and are forecast to rise slightly in 2021 to 13.89%. Working capital is forecast to decrease 12% in 2021, after a forecast increase of 7.8% in 2020.