Where will U.S. ag grow (and decline) in 2021?
By Bree Rody
The USDA’s Economic Research Service has issued its first of three farm income statement and balance sheet estimates, which provides insight into the financial status of the farm economy.
Economist Carrie Litkowski presented the data in the online webinar last week. The data is generally used to determine the financial health of the sector. All data is U.S.-only. That includes an estimated two million farms, nearly one million farm businesses and six million people living in farm households. The data does not include services related to farming such as ag services or equipment manufacturing.
Overall, net farm cash income is expected to drop 5.8%, for an annual total of $128.3 billion (down $7.9 billion). Net farm income is expected to drop 8.1 percent down to $111.4 billion. Litkowski says this is driven largely by a drop in direct government payments, which are forecast to decrease by $21 billion (43 percent). The bulk of that decrease comes from a decrease in miscellaneous payments which include coronavirus assistance funds. Those assistant funds are still expected to total $2.5 billion this calendar year.
Cash receipts form commodity sales are expected to increase modestly by 5.5 percent ($20.4 billion). This is driven by higher prices and larger quantities. Cash receipts generated from corn and soybeans are expected to increase the most.
Federal commodities insurance indemnities are expected to increase by $0.7 billion (7.3 percent). Average net cash farm income is set to decrease six percent to $91,800. Median total farm household income is expected to increase by one percent to just under $87,000.
Profits for the sector are expected to decline from 2020, but still in single digits (7.5 percent for net cash, 9.7 percent for net farm average income). Profits are still projected to be higher than they were in 2016 through 2019.
In terms of expenses, certain things have trended upward in 2020. Spending on fuels and oils, livestock and poultry purchases and interest are all expected to go up in 2021, although are still lower than or equal to what they were in 2019. Fertilizer, labor, feed, property taxes and pesticides are all set to increase and have steadily increased since 2019. Seeds and net rent are set to decrease.
The overall decline in net income varies by region; the westernmost and easternmost regions of the U.S. as well as the upper midwest will see double-digit declines. The Prairie Gateway and Northern Great Plains regions will see only modest declines (two and one percent, respectively). The Heartland region is expected to increase by 9%.