Highlights From the February 2020 Farm Income Forecast
Farm Sector Profits Forecast Near Average in 2020
Net farm income, a broad measure of profits, is forecast to increase $3.1 billion (3.3 percent) to $96.7 billion in 2020. In inflation-adjusted 2020 dollars, net farm income is forecast to increase $1.4 billion (1.4 percent) from 2019. In inflation-adjusted terms, net farm income in 2020 would be 30.5 percent below its peak of $139.1 billion in 2013 but 5.4 percent above its 2000-18 average ($91.7 billion), if realized. Net cash farm income is forecast to decrease $10.9 billion (9.0 percent) to $109.6 billion. Inflation-adjusted net cash farm income is forecast to decrease $13.1 billion (10.7 percent) from 2019 and would be 0.6 percent below its 2000-18 average ($110.2 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—such as changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings—reflected in the net farm income measure above. The divergence between the two measures in the 2020 forecasts is largely caused by how net sales from inventories are treated. Net cash farm income records income in the year the sale occurred, while net farm income counts it in the year the production occurred. High net sales ($14.7 billion) from crop inventories forecast in 2019 are expected to boost net cash farm income significantly that year. Very low net sales from inventories ($0.5 billion) in 2020 are expected to contribute to a decrease in net cash farm income between the two years. In the net farm income series, cash receipts are adjusted to remove net inventory changes and track more closely with the value of annual agricultural production.
Cash receipts for all commodities are forecast to increase $10.1 billion (2.7 percent) to $384.4 billion (in nominal terms) in 2020. Total animal/animal product receipts are expected to increase $8.2 billion (4.6 percent) following growth in receipts for hogs, milk, cattle/calves, and poultry/eggs. Total crop receipts are expected to be largely unchanged, increasing $1.9 billion or 1.0 percent from 2019 levels in nominal terms but declining 0.9 percent when adjusted for inflation. Direct government farm payments are forecast to decrease $8.7 billion (36.7 percent) to $15.0 billion in 2020 (in nominal terms), with the decrease caused by lower anticipated payments from the Market Facilitation Program.
Total production expenses (including operator dwelling expenses) are forecast to increase $10.4 billion (3.0 percent) to $354.7 billion (in nominal terms) in 2020. Spending on most categories of expenses, especially feed and hired labor, is expected to increase but interest expenses are expected to decline.
Farm business average net cash farm income is forecast to decrease $8,100 (8.7 percent) to $85,200 per farm in 2020. Every resource region is forecast to see farm business average net cash farm income decrease by 4.4 percent or more. All categories of farm businesses except hogs and dairy farms are expected to see average net cash farm income fall in 2020.
Farm sector equity is forecast up by $29.8 billion (1.1 percent) in nominal terms to $2.70 trillion in 2020. Farm assets are forecast to increase by $39.5 billion (1.3 percent) to $3.13 trillion in 2020, reflecting an anticipated 1.4 percent rise in farm sector real estate value. When adjusted for inflation, farm sector equity and assets are both forecast to decline in 2020. Farm debt in nominal terms is forecast to increase by $9.7 billion (2.3 percent) to $425.3 billion, led by an expected 3.2 percent rise in real estate debt. The farm sector debt-to-asset ratio is expected to rise from 13.45 percent in 2019 to 13.59 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 decline 15.0 percent from 2019.
Median Income of Farm Operator Households Forecast to Rise in 2019, Remain Flat in 2020
Total median farm household income is forecast to increase to $76,810 in 2019 and to remain relatively flat in 2020, at $76,590. In percentage terms, that is a nominal increase of 5.6 percent (a 4.1 percent increase after inflation) between 2018 and 2019, and a subsequent decline of 0.3 percent (a 2.1 percent decline after inflation) in 2020. The forecast rise in 2019 is notable because it is 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 2019 to -$1,383 from -$1,735 in 2018 but then decline slightly to -$1,840 in 2020. In recent years, roughly half of farm households have had negative farm income each year. As a result, many of these households rely on off-farm income—and median off-farm income is forecast to increase each year, up 2.2 to $67,314 in 2019 and up 1.9 percent to reach $68,589 in 2020. 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.