FAQs

Q: Are the effects from the COVID-19 pandemic reflected in the 2020 farm income and farm household income forecasts?

The 2020 farm income forecast incorporates anticipated effects from the COVID-19 pandemic on commodity value of production in 2020. The USDA, Economic Research Service (ERS) derives value of production forecasts using commodity production and price forecasts from the published World Agricultural Supply and Demand Estimate (WASDE) report. For commodities not published in the WASDE reports, forecasts come from ERS subject matter experts. These forecasts consider the expected implications of the COVID-19 pandemic.

The 2020 farm income forecast also accounts for COVID-19-related aid paid directly to farmers by the Federal Government and expected to be received in calendar year 2020, in addition to direct payments under the 2018 Farm Bill and other existing ad-hoc programs. This includes direct government payments to farmers under the Coronavirus Food Assistance Program (CFAP) to assist farmers and ranchers in response to the COVID-19 national emergency. Also included in our 2020 government payments forecast are the value of loans made to agricultural producers under the Small Business Administration’s Paycheck Protection Program (PPP), which provides forgivable loans designed to provide a direct incentive for small businesses to keep their workers employed during the pandemic.  Loans that are expected to be forgiven are treated as direct government payments. These forecasts may be revised when information on the amount of loan forgiveness is available.

The 2020 farm household income forecast incorporates expected effects to farm income from the farm income forecast, as well as expected effects on off-farm income. Specifically, we use forecasted changes in wages, industrial production, consumer prices, investment levels, and Gross Domestic Product (GDP)  per capita from Oxford Economics on August 20, 2020, to forecast farm household income by component, including off-farm employment, off-farm business income, transfer income, investment income, and interest and other income. Estimates of Economic Impact Payments were also incorporated into the forecast of off-farm transfer income for 2020.

Q: Are Market Facilitation Program (MFP) payments to farmers included in your 2018 estimates and 2019 and 2020 forecasts?

Yes. MFP payments are included in all forecasts and estimates according to the year in which they are paid or expected to be paid. As such,

  • Estimates for 2018 include all MFP payments received in 2018; these are available for the U.S. and States.
  • The U.S. 2019 forecast includes the MFP payments authorized in 2018, but received in 2019, and payments from the first and second tranche of the 2019 MFP. 
  • The U.S. 2020 forecast includes residual payments from the first and second tranche of the 2019 MFP plus expected payments from the third tranche of the 2019 MFP.

Please see the line item for MFP payments paid in each available year in the table Federal Government direct farm program payments.

Q: What are the 2020 release dates for the farm income forecasts?

Data on farm income and wealth, including the farm income forecasts, will be released on February 5, September 2, and December 2 in 2020. 

Q: What additional information is included in each successive release?

The periodic farm income forecasts and estimates (available in U.S. and State-level farm income and wealth statistics) published by the Economic Research Service for a particular calendar year (5 releases over a span of 19 months) can vary markedly from one release to the next because of changes in the information set available to the Farm Income Team. Notably, as the year progresses, each new release substitutes incrementally more observed information gathered via surveys and other means for information that is produced by a forecast model.

Forecasts at the beginning of the year have very little "known" information for the calendar year under study, while later forecasts are based on a growing share of observed data. The first forecast is made before planting intentions are known—let alone production outcomes, which vary with weather and other factors—and price outcomes, which adjust to shifts in both domestic and global production. Farmers also respond to shifts in expected income by varying their input purchases, debt, inventories, and participation in Government programs. These outcomes and decisions are revealed over the course of the production year, and are reflected in data that may lag those decisions by up to a year. Each forecast takes advantage of new information as it becomes available, and release dates are largely timed accordingly.

For example:

  • The February 2017 forecast of calendar-year 2017 income relied almost exclusively on information on current crop and livestock prices and was based mostly on 2016 production that would be sold in 2017, rather than production occurring in 2017 and sold that year. This is because in February little information on 2017 production was available at the time.
  • The second 2017 forecast, in August 2017, included the first survey-based information from USDA on crop production for the crop marketing year. This information on domestic crop production was supplemented by additional animal/animal product domestic production and use, as well as international production, consumption, and trade that allowed for an improved price forecast.
  • The November 2017 release incorporated newly available price data as well as updates to current-year harvest, sales, and inventory data.
  • The fourth forecast of 2017 farm income, released in February 2018, included additional 2017 monthly price information, as well as marketing pattern data that enabled a more complete picture of whether crop sales occurred in one calendar year or another.
  • The 2017 calendar-year forecast process culminated in August 2018, when National Agricultural Statistics Service estimates of State/U.S. production and expense data gathered through the 2017 Agricultural Resource Management Survey became available. In August 2018, the 2017 forecasts were labeled as estimates.

The staggered incorporation of additional data that become available throughout the year means that individual components of the farm income accounts are subject to varying degrees of uncertainty in any given forecast. For instance, prices change throughout the year in response to international supply and demand conditions, production estimates change as weather conditions become known, and stocks data change as producers decide on whether to store or market their production. The forecast of crop inventory adjustment is a residual of measures, taken at different points in the year, of total supply (production and beginning-of-year stocks) and use (domestic and exports). Government farm program payments—which are a function of prices, production, eligibility rules, and ad hoc disaster legislation—are also hard to predict, and forecasts improve as USDA data become available.

Q: What is the typical forecast error associated with a release?

A historical review of forecast data published by ERS from 2001 through 2016 (as of August 30, 2017) indicates how the four successive forecasts compare to the first published estimate, on average, over the 19-month period. The average absolute percentage difference (AAPD) indicates how the interim forecasts differ from the final estimate. Averaged over 2001-16, the calculated AAPD for the four forecasts relative to their corresponding August estimates is 11.4 percent for net cash farm income and 10.8 percent for net farm income. Also, the forecast correctly predicted the direction of the change in net cash income relative to the previous year 84 percent of the time, and net farm income 95 percent of the time. Moreover, our analysis indicates that the arrival of new data throughout a given year leads to a significant improvement in forecasts across the 19-month period, with a net cash farm income AAPD of 16 percent (February), 13 percent (August), 11 percent (November), and 8 percent (February of the following year) relative to the first estimate released in August of the following year, with corresponding net farm income AAPDs of 15 percent, 13 percent, 7 percent, and 8 percent.

The value of ERS forecasts is evident by comparing the AAPDs above to a naïve forecast AAPD. The naïve approach assumes the forecast value generated for the previous year will be the value for the current year as well. Across 2001-16, naïve forecasts of net cash farm income had an average AAPD of 17.2 percent and the naïve forecast for net farm income had an AAPD of 21.9 percent, relative to the eventual estimated values. In sum, the naïve forecasts underperformed the USDA/ERS forecasts (with AAPD of 11.4 percent for net cash farm income and 10.8 percent for net farm income) over the 2001-16 period.

Evolution of the ERS forecast over the forecast cycle (as of August 30, 2017 )
Net cash farm income ($ billion)
Forecast/estimate year Forecast release (1): February Forecast release (2): August Forecast release (3): November Forecast release (4): February Estimate release (1): August Estimate release (2): November
2000 NA NA NA 56.4 55.4 57.4
2001 50.7 52.4 60.8 59.5 59.4 59.7
2002 50.9 51.1 50.4 45.1 59.3 59.3
2003 51.5 49.1 49.1 63 62 68.6
2004 55.9 55.9 77.5 77.8 85.5 85.5
2005 78.1 85.2 83.2 82.8 81.2 81.2
2006 64.8 63.2 66.6 66.7 67.9 67.9
2007 67.2 85.9 85.7 87.6 115.2 87.4
2008 96.6 101.3 90.7 93.4 97.6 97.5
2009 77.3 68.2 69.8 70.8 69.1 69.1
2010 76.3 85.3 92.5 91.3 92.3 92.3
2011 98.6 114.8 109.8 108.8 144.2 134.7
2012 96.3 139.3 132.8 111.4 107.3 134.3
2013 123.5 120.8 129.7 130.1 130.8 131
2014 101.9 123 108.2 115 127 128.6
2015 89.4 100.3 93 93 108 105.5
2016 90.9 94.1 90.1 91.9 89.2 NA
2017 93.5 100.4 NA NA NA NA
Net farm income ($ billion)
Forecast/estimate year Forecast release (1): February Forecast release (2): August Forecast release (3): November Forecast release (4): February Estimate release (1): August Estimate release (2): November
2000 NA NA NA 45.4 45.2 46.4
2001 41.3 42.4 50.4 49.3 47.9 45.7
2002 40.6 40.5 36.2 32.4 35.3 35.3
2003 44.9 52.3 55.3 54.9 54.9 59.2
2004 47.6 47.6 73.7 73.6 82.5 82.5
2005 64.4 71.8 71.5 72.6 73.8 73.8
2006 56.2 54.4 48.9 60.6 59 59
2007 66.6 87.1 87.5 88.7 86.8 86.8
2008 92.3 95.7 86.9 89.1 87.2 87.1
2009 71.2 54 57 56.4 62.2 62
2010 63 77.1 81.6 78.9 79 79.1
2011 94.7 103.6 100.9 98 126.9 117.8
2012 91.7 122.2 114 112.8 113.8 113.9
2013 128.2 120.6 131 130.5 131.3 129
2014 96 113.2 96.9 108 91 90.4
2015 73.6 58.3 55.9 56 81 80.9
2016 54.8 71.5 66.9 68.3 61.5 NA
2017 62.3 63.4 NA NA NA NA
NA = Data are unavailable.
Note: Net farm income data for 2000-12 adapted from Kuethe, Hubbs, and Sanders (2017), "Assessing the Accuracy of USDA's Farm Income Forecast." Proceedings of the NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management, St. Louis, MO.
Data as of August 30, 2017.

Q: How does the release of the 2017 Census of Agriculture impact the Farm Income and Wealth Statistics data product?

For the August 30, 2019, release, data from the 2017 Census of Agriculture were incorporated in a number of ways to improve ERS estimates at the State and National levels. The 2017 Census data complement 2012 Census of Agriculture data used in an ERS model to estimate, where needed, State-level cash receipts from the multistate aggregates reported by USDA’s National Agricultural Statistics Service (NASS). Additionally, 2017 data supplement 2012 data used to estimate farm-related income and production expense data for States where ARMS provides insufficient coverage. These adjustments to the Farm Income and Wealth Statistics data product in response to 2017 Census of Agriculture data affect State totals back to 2013 but do not affect national aggregates. Finally, information contained on farm sales class and other structural data in the 2017 Census of Agriculture were used to revise the 2017 ARMS survey data underlying the Farm Income and Wealth Statistics.

Q: How does ERS define the farm resource regions used in the farm business income summary findings?

Farm resource regions are defined using farm production regions, land resource regions, crop reporting districts, and farm characteristics. The regions are designated at the county level and therefore do not generally follow State boundaries. See the ERS report, Farm Resource Regions (AIB-760, August 2000) for more information, or download a table to link counties to the appropriate ERS Resource Region.

Q: Does ERS produce county-level data on farm sector income?

A: No, State-level is the most geographically disaggregated estimate produced by ERS. However, some published U.S. Government data on county-level farm income are available from other sources, although definitions can vary across data sources. The census of agriculture is conducted every 5 years by USDA and provides detailed data on the market value of agricultural products sold, farm production expenses, government payments, and income from farm-related sources. The census of agriculture data also provide a measure of net cash farm income. The data are available through the NASS-USDA Quick Stats data base and from Census publications. The U.S. Bureau of Economic Analysis publishes annual data on county-level net farm income accruing to proprietorship farms, corporations, and hired farm labor as part of their Local Area Personal Income statistics. Their Farm Income and Expense (CA45) tables additionally provide annual estimates of cash receipts from farm production, other farm income, production expenses, and the value of inventory change.

Q: Does ERS estimate cash receipts or farm income for Puerto Rico and other U.S. territories?

No, ERS does not estimate cash receipts or farm income for non-States. Likewise, cash receipts for U.S. territories are not included in the U.S. totals.

Q: Do the ERS farm income and wealth forecasts reflect changes in trade practices?

Trade actions expected to affect the production, sale, or price of farm commodities in the upcoming year are reflected in the ERS farm income and wealth forecasts. In deriving forecasts of the value of animal/animal product and crop production, ERS uses commodity production and price forecasts from the published World Agricultural Supply and Demand Estimate (WASDE) report and, for commodities not published in the WASDE reports, forecasts from ERS subject matter experts. These forecasts consider agriculture-related trade actions that are in place or with start dates formally announced at the time of this update.

Q: What is included in the "Miscellaneous crops" and "All other animals and products" categories in the cash receipts tables?

A: The exact lists of commodities are not available because the source data from USDA-NASS is confidential in order to avoid disclosure of individual operations. However, many of the types of commodities included in the composite categories can be found in the census of agriculture estimates; comparing these census tables with the ERS cash receipt tables can provide some additional insight. For a given State, commodities included in the census of agriculture, but not explicitly listed by ERS, are most likely contained in the ERS composite groupings. Still, the resulting list of commodities will not be definitive as the census of agriculture tables include some aggregation as well. 

Q: What does ERS use for their commodity price forecasts?

A: Our forecast price assumptions for eight commodities (wheat, corn, sorghum, barley, oats, rice, soybeans, and upland cotton) are based on average crop marketing-year commodity prices from the most recent World Agricultural Supply and Demand Estimates (WASDE) report. However, because not all commodities have a price forecast in WASDE, we also rely on ERS situation and outlook reports and subject matter experts to develop commodity price forecasts of our own. See New Method for Forecasting Cash Receipts for further information.

Q. Why are total and Federal commodity insurance premiums and indemnities reported as separate expense and income items in the "value added" report table?

A: The prior convention was to include insurance indemnities in the "other farm income" category while premiums were included in the "miscellaneous expenses" category. In February 2015, the data were broken out for all prior years for which data are available, as well as for the forecast year. The ERS customer base has shown an interest in having farm insurance information reported separately, so we now provide that information to the public. Since August 2016, the commodity insurance premium and indemnity data have been further decomposed into total and Federal components, and this level of detail is now calculated back to 2008.

Q: What is the difference between net cash and net farm income?

A: Net cash income includes only cash receipts and expenses; net farm income is net cash income plus the value of home consumption, changes in inventories, capital replacement, and implicit rent and expenses related to the farm operator's dwelling that are not reflected in cash transactions during the current year. As such, net cash income is generally less variable than net farm income.

Since only cash receipts and expenses are included, farmers can manage the timing of crop and livestock sales and of input purchases to stabilize the variability in their net cash income. Farmers can hold crops from large harvests to sell in the coming year when output may be lower and prices higher. As a consequence, net cash farm income can remain high in years when output is average or subpar. However, net cash income cannot be maintained for long without being replenished through production.

Q: What are the major changes in Federal programs under the 2018 Farm Act that affect direct government payments to farmers?

A: Crop insurance options and agricultural commodity programs will exist much as under the 2014 Farm Act. However, farmers will have greater flexibility to switch enrollment between Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) programs. The Dairy Margin Protection Program is replaced with Dairy Margin Coverage (DMC). All major conservation programs are continued, although some are modified significantly. For more information, see Agriculture Improvement Act of 2018: Highlights and Implications.

Q: Are cash receipts reported by ERS identical to value of production reported by NASS?

A: The answer to this question depends on the commodity examined. For livestock and for certain crops (for which there is no Commodity Credit Corporation (CCC) program, no reductions for onfarm use of commodities, and no lag in calendar years between production and sale), the NASS and ERS estimates will be identical. ERS cash receipt estimates will differ from NASS value of production for commodities (1) where CCC placements occur, (2) where crop production is used on the farm (e.g., fed to livestock), and (3) where commodities are marketed across more than 1 calendar year.

Q: What are you using to convert nominal to real dollars?

A: We use the GDP chain-type price index, from the Bureau of Economic Analysis (BEA) as published by the Federal Reserve (see St. Louis Federal Reserve website), to convert nominal estimates and forecasts to a real or inflation-adjusted constant-dollar series. When BEA data are unavailable, we use a forecast of the GDP chain-type price index from Oxford Economics. Occasionally, the price index may be revised in its entirety, and this can result in additional changes in the inflation-adjusted farm income and wealth estimates. The most recent BEA comprehensive update of the price index series (released on July 27, 2018) was first included in the November 30, 2018, farm income release.

Q: Is it possible for me to get a copy of all of the data contained in this release in a single file?

A: Yes. Please go to the data access page in order to download a comma-separated values (CSV) data file. Historic record data in the CSV contain nominal dollar values; an inflation factor to adjust to current dollars is included on each record.

Q: I would like to view charts and maps of these data, are they available?

A: Please see our data visualizations associated with the data product, including Charts and Maps About Your State, Charts and Maps of U.S. Farm Sector Balance Sheet Data, and Charts and Maps of U.S. Farm Income Statement Data.

Last updated: Wednesday, September 02, 2020

For more information, contact: Farm Income Team