Farms and Farm Households During the COVID-19 Pandemic

How the coronavirus (COVID-19) pandemic affects the 2020 farm financial indicators, like net farm income, are reflected in the Economic Research Service’s latest Farm Income Forecast released on February 5, 2021. Please visit the Farm Sector Income and Finances topic page to learn more.

The coronavirus pandemic has widely affected the U.S. economy, including the farm sector and farm households. Farm businesses have experienced disruptions to production because of lowered availability of labor and other inputs, and reductions in output prices resulting from declines in demand for commodities in certain market segments. Additionally, farm households may be affected through loss of wages and benefits from off-farm labor that they use to fund farm production needs, household living expenses, investments, and payments on farm business debt.

Reductions in available labor affect crop and livestock production, as well as processing capacity for crop and animal products that leave the farm. Reduced processing capacity results in lower consumption of certain agricultural commodities. Although these downstream shocks originate outside of production agriculture, the effects manifest in the prices that farmers receive for the commodities they produce—hence, their farm income.

Historically, most farm households report a loss from their farming operations and rely on off-farm income sources for both on-farm and off-farm needs. Off-farm income is generally more stable and helps manage farm risks. However, as the pandemic increases risks associated with farming, it also increases risks off the farm.

Farm households could be affected by the pandemic through loss of off-farm income or loss of employment-based health insurance benefits. Off-farm income sources vary by household. The majority (61 percent) comes from wages and salaries of operators and other household members, and the remainder comes from:

  • transfer income (19 percent),
  • non-farm business income (11 percent),
  • interest and dividend income (4 percent), and
  • other sources of income (6 percent).

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.

The USDA and other agencies have established a number of programs to support farm income in the wake of the pandemic. Farm households can also avail themselves of Federal, State, and local programs to support traditional off-farm income streams disrupted by COVID-19.

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