Highlights from the December 2020 Farm Income Forecast
Farm Sector Profits Forecast to Increase in 2020
Net farm income, a broad measure of profits, is forecast to increase $36.0 billion (43.1 percent) to $119.6 billion in 2020. In inflation-adjusted 2020 dollars, net farm income is forecast to increase $35.0 billion (41.3 percent) from 2019, increasing for the fourth consecutive year. If realized, net farm income in 2020 in inflation-adjusted terms would be at its highest level since 2013, 32.0 percent above its 2000-19 average of $90.6 billion.
Net cash farm income is forecast to increase $24.7 billion (22.6 percent) to $134.1 billion in 2020. Inflation-adjusted net cash farm income is forecast to increase $23.4 billion (21.1 percent) from 2019, which would put it at its highest level since 2014 and be 22.5 percent above its 2000-19 average ($109.5 billion). Net cash farm income encompasses cash receipts from farming as well as farm-related income, including Government payments, minus cash expenses. It does not include noncash items—including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings—reflected in the net farm income measure above.
Cash receipts for all commodities are forecast to decrease $3.2 billion (0.9 percent) to $366.5 billion (in nominal terms) in 2020. Total animal/animal product receipts are expected to decrease $9.7 billion (5.5 percent) with declines in receipts for broilers, cattle/calves, and hogs. Total crop receipts are expected to increase $6.5 billion (3.3 percent) from 2019 levels. Higher receipts for fruit/nuts and soybeans are expected to more than offset lower receipts for corn and cotton. Direct Government farm payments are forecast at $46.5 billion in 2020, an increase of $24.0 billion in nominal terms (107.1 percent). The expected increase is because of supplemental and ad hoc disaster assistance for COVID-19 relief.
Total production expenses, including operator dwelling expenses, are forecast to decrease $5.2 billion (1.5 percent) to $343.6 billion (in nominal terms) in 2020. Interest expenses, livestock/poultry purchases, and oils/fuels expenses are expected to decrease, but fertilizer expenses and net rent to landlords are expected to increase.
Farm business average net cash farm income is forecast to increase $25,700 (32.6 percent) to $104,500 per farm in 2020. All resource regions are forecast to see farm business average net cash farm income increase. When grouped by commodity specialization, nearly all groups of farm businesses are expected to see average net farm income rise in 2020.
Farm sector equity is forecast up by $28.9 billion (1.1 percent) to $2.69 trillion (in nominal terms) in 2020. Farm assets are forecast to increase by $45.5 billion (1.5 percent) to $3.12 trillion in 2020, reflecting anticipated increases in the real estate value and investments and other financial assets held by the sector. Farm debt is forecast to increase by $16.6 billion (4.0 percent) to $435.2 billion (in nominal terms), led by an expected 6.1-percent rise in real estate debt. The farm sector debt-to-asset ratio is expected to rise from 13.61 percent in 2019 to 13.95 percent in 2020. Working capital, which measures the amount of cash available to fund operating expenses after paying off debt due within 12 months, is forecast to increase 6.0 percent from 2019. When adjusted for inflation, farm sector equity and assets are relatively unchanged from 2019.
Median Income of Farm Operator Households Forecast to Rise in 2019 and 2020
Errata: On December 11, 2020, text that characterized the 2019-20F percent decline in median off-farm income was corrected to state: "As in previous years, many farm households rely on off-farm income—the median is forecast to decrease in 2020, down 1.2 percent to $67,950 from $68,750 in 2019."
Total median farm household income is forecast to increase to $86,992 in 2020 from $83,111 in 2019; a nominal increase of 4.7 percent (a 3.4 percent increase after adjusting for inflation) in 2020. The forecasted rise in 2020 and the increase in 2019 relative to 2018 are notable because they are counter to the trend from 2015 through 2018 of declining median farm household income.
Farm households typically receive income from both farm and off-farm sources. Median farm income earned by farm households is forecast to increase in 2020 to $1,187 from $297 in 2019. The positive median farm in 2019 and further rise in 2020 is notable as median farm income earned by farm households was negative each year between 1996 and 2018. The increase in median farm income is partly because of increases in supplemental and ad hoc disaster assistance program payments. In 2020, programs such as the Paycheck Protection Program (PPP) and Coronavirus Food Assistance Programs (CFAP) 1 and 2 provided financial relief to those affected by the global pandemic.
As in previous years, many farm households rely on off-farm income—the median is forecast to decrease in 2020, down 1.2 percent to $67,950 from $68,750 in 2019. This reflects estimated lost employment and wage income because of the coronavirus pandemic, which is partially offset by estimated Economic Impact Payments received by most U.S. households in response to the pandemic. (Because farm and off-farm income are not distributed identically for every farm, median total income will generally not equal the sum of median off-farm and median farm income.)
See the Farm Household Income and Characteristics data product tables for financial statistics of farm operator households.
- Farm Sector Income and Finances for a discussion of the full farm sector income forecast.
- Farm Household Well-being for a discussion of the farm household income forecast.
- Farm Income and Wealth Statistics for the complete 2020 farm income forecast data and full history of U.S. and State farm sector estimates.
- 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 for farm sector data visualizations.
- Farm Household Income and Characteristics for data related to farm household income and characteristics.
- ARMS Farm Financial and Crop Production Practices data that underpin the farm income forecast and estimates.