Farms and Farm Households During the COVID-19 Pandemic

The coronavirus (COVID-19) pandemic affected the U.S. economy including the farm sector and farm households. Farm businesses experienced disruptions to production because of lowered availability of labor and other inputs, and output prices were affected by changes in demand for commodities in certain market segments. In response to the economic turmoil from COVID-19, U.S. Congress passed six economic relief and stimulus bills in 2020 to provide financial assistance to farm businesses and farm households. USDA and other Government agencies worked to implement authorized programs and disburse payments in 2020–22.

Farm Sector Income During the Pandemic

The USDA Economic Research Service (ERS) releases calendar year farm income and financial forecasts three times per year. Some insights on how the coronavirus (COVID-19) pandemic affected the 2020–22 farm financial indicators can be taken from the farm income data product released on December 1, 2022. To learn more, please visit the Farm Sector Income and Finances topic page.

The farm income outlook evolved during the pandemic because of changing conditions including changes in commodity prices, production, and Government support. For example, projections for the combined value of production for eight major crops—barley, corn, upland cotton, oats, rice, sorghum, soybeans, and wheat—for crop year 2020/21 shifted considerably throughout 2020 and 2021. In early February 2020, just before the outbreak of the pandemic in the United States, the combined value of production was forecast at $108.8 billion based on price and production quantity projections from USDA Agricultural Projections to 2029. Starting in May 2020, the World Agricultural Supply and Demand Estimates (WASDE) report had price and production projections for crop year 2020/21. With the June 2020 WASDE report, the combined value of production forecast was revised down by 5 percent to $103.7 billion. Three months later, in September 2020, the forecast was revised up to $110 billion, 1 percent above the pre-pandemic February 2020 forecast. With the May 2021 WASDE report, the 2020/21 crop year price and production projections became estimates, and the value of production was estimated at $128.0 billion, 18 percent above the February 2020 forecast. Most of the upward revisions in September 2020 and May 2021 were because of higher commodity prices rather than changes in production quantities.

The 2020 forecast for the combined value of production of six major animal/animal products (beef, pork, broilers, turkeys, eggs, and milk) also fluctuated throughout the 2020 calendar year but remained lower than the pre-pandemic forecast. The pre-pandemic January 2020 forecast of the combined value of production for beef, pork, broilers, turkeys, eggs, and milk was $144.1 billion. In June 2020, that forecast was revised down by $17.9 billion (12 percent) to $126.2 billion. The September 2020 forecast was slightly higher than the June forecast at $127.5 billion. By May 2021, the value of production was estimated at $131.3 billion, 9 percent below the pre-pandemic January 2020 forecast.

For the farm income forecasts, ERS creates calendar-year forecasts of cash receipts and value of production based on the World Agricultural Supply and Demand Estimates and other data.

For more information on trends in the value of production forecasts using monthly data, see: 

COVID-19 Working Paper: A Timely Tool for Evaluating Financial Conditions in Agriculture: USDA Forecasts of the Value of Production in the Face of COVID-19

Highlights from the Farm Income Forecast covers the most recent net cash income and net farm income forecasts for the farm sector.

Federal Financial Assistance to the Agriculture Sector

Using the authority from the COVID-19 relief and stimulus bills passed by Congress, USDA created the Coronavirus Food Assistance Program (CFAP) specifically targeted to farm operations. Other Federal departments and agencies created more general programs that some farm operations were eligible for, such as the Paycheck Protection Program (PPP), or expanded eligibility to the agriculture sector, such as the Economic Injury Disaster Loan Program (EIDL).

Below is a brief discussion of some assistance available to farm operations. Further information and analysis on calendar year 2020 payments is available, see:

COVID-19 Working Paper: Financial Assistance for Farm Operations and Farm Households in the Face of COVID-19

Coronavirus Food Assistance Programs

CFAP provided direct payments to producers who faced market disruptions, increased production costs, and reduced farm-level prices. USDA developed and implemented two rounds of funding for CFAP (CFAP 1 and CFAP 2). As of November 2022, both rounds totaled $31.0 billion ($11.8 billion from CFAP 1 and $19.2 billion from CFAP 2) in direct payments to farmers and ranchers.

The USDA website provides additional details and data about CFAP programs, including current levels of payments under CFAP1 and CFAP2 by commodity and State.

USDA Pandemic Assistance to Producers

On March 24, 2021, USDA announced USDA Pandemic Assistance to Producers, a new initiative to provide financial assistance to producers who felt the effects of COVID-19 market disruptions. USDA is dedicating at least $6 billion to this initiative that aims to reach a broader set of producers than in previous COVID-19 relief programs. USDA has made additional payments to producers under existing CFAP programs and rolled out new programs under the initiative. More information about USDA Pandemic Assistance to the sector, including direct payments to producers, may be found on the farmers.gov website.

Although much of the assistance is to be paid directly to farmers, the initiative includes some provisions not targeted for farm operations for research, training, and outreach. In the USDA, Economic Research Service farm income statistics, only direct, financial assistance to agricultural producers is included as income. 

Paycheck Protection Program

The Paycheck Protection Program (PPP), implemented by the Small Business Administration (SBA), was intended to help small businesses—including farm operations—keep employees on the payroll and/or bring back furloughed or laid off workers. Business with either positive employee payroll costs or positive income were eligible to receive forgivable PPP loans. The loans that meet the forgiveness requirements, including using 60 percent of the loan on payroll expenses, were fully forgiven.

As of October 2022, PPP loans to the farm sector that were forgiven totaled over $5.8 billion in calendar year 2020 and almost $8.6 billion in 2021. The USDA, Agricultural Resource Management Survey (ARMS) data for 2019 indicated that 72 percent of all family farm operations would have been eligible to receive a PPP loan.

More information about the PPP loans, including payments by industry classification, lender, size, and State may be found on the SBA website.

The Chart of Note, COVID-19 Federal financial assistance to U.S. farms varied by State, provides total aid from CFAP and PPP by State in 2020.

Further information may also be found in the Amber Waves findings:

COVID-19 Related Assistance for Family Farm Households

Farm households may be affected by the pandemic through loss of wages and benefits from off-farm jobs or off-farm businesses that supplement income from farming. Family farm households could receive Federal COVID-19-related financial assistance from two main sources: Economic Impact Payments and Federal Pandemic Unemployment Compensation.

Economic Impact Payments 

Economic Impact Payments (EIP) were meant to provide households with an immediate injection of cash to spur demand and mitigate the economic downturn. The full EIP amount in calendar year 2020 was $1,200 for individuals or $2,400 for couples filing jointly; households with dependents received an additional $500 per dependent. The USDA, Economic Research Service (ERS) estimated the amount of these payments using 2020 Agricultural Resource Management Survey data. These estimates indicated the median married and single farm household would have received an EIP equivalent to about a one-third of their average monthly income.

Federal Pandemic Unemployment Compensation

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided assistance through Federal Pandemic Unemployment Compensation (FPUC) to those who were unemployed in 2020 due to the pandemic. These FPUC benefits were in addition to existing State unemployment benefits and were available to anyone who qualified for at least $1 of unemployment benefits. Farm households were eligible and those that applied received FPUC following a pandemic-related job loss or furlough.

Farm Household Income and the Pandemic

The latest USDA, Economic Research Service (ERS) farm household income estimates through 2021 and forecasts for 2022 were released on December 1, 2022 and they reflect the observed and expected, continued effects of the pandemic. To learn more, please visit the Farm Household Well-being topic page.

For households that operate a farm, total household income is a combination of income earned from the farm and off-farm sources. Off-farm income sources vary by household. In 2021, the majority (57 percent) came from the wages and salaries of operators and other household members (down from 59 percent in 2020). The remainder came from:

  • transfer income (25 percent, up from 23 percent in 2020),
  • non-farm business income (8 percent, up from 7 percent in 2020),
  • interest and dividend income (5 percent, down from 6 percent in 2020), and
  • other sources of income (5 percent, unchanged from 2020).

Of these, the loss of wages and salaries earned off the farm are most likely to result in a decline in household income because of COVID-19.

 

Charts of Note:


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