Highlights from the September 2020 Farm Income Forecast
Farm Sector Profits Forecast to Increase in 2020
Net farm income, a broad measure of profits, is forecast to increase $19.0 billion (22.7 percent) to $102.7 billion in 2020, after increasing in both 2018 and 2019. In inflation-adjusted 2020 dollars, net farm income is forecast to increase $18.3 billion (21.7 percent) from 2019. If realized, in inflation-adjusted terms, net farm income in 2020 would be 25.4 percent below its peak of $137.6 billion in 2013, but 13.8 percent above its 2000-19 average ($90.2 billion).
Net cash farm income is forecast to increase $4.9 billion (4.5 percent) to $115.2 billion in 2020. Inflation-adjusted net cash farm income is forecast to increase $4.0 billion (3.6 percent) from 2019, which would be 5.7 percent above its 2000-19 average ($109.0 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 $12.3 billion (3.3 percent) to $358.3 billion (in nominal terms) in 2020. Total animal/animal product receipts are expected to decrease $14.3 billion (8.1 percent) with declines in receipts for broilers, cattle/calves, hogs, and milk. Total crop receipts are expected to increase $2.0 billion or 1.0 percent from 2019 levels. Higher receipts for fruit/nuts are expected to more than offset lower receipts for corn, wheat, cotton, and soybeans. Direct government farm payments are forecast at $37.2 billion in 2020, an increase of $14.7 billion (65.7 percent, in nominal terms). 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 $4.6 billion (1.3 percent) to $344.2 billion (in nominal terms) in 2020. Interest expenses and livestock/poultry purchases are expected to decrease, but fertilizer and cash labor expenses are expected to increase.
Farm business average net cash farm income is forecast to increase $3,800 (4.8 percent) to $82,600 per farm in 2020. All resource regions, except the Heartland and Prairie Gateway, are forecast to see farm business average net cash farm income increase. Farm businesses specializing in crops are expected to see average net cash farm income increase in 2020, while those specializing in cattle/calves, hogs, poultry, and dairy are expected to see average net cash farm income decrease in 2020.
Farm sector equity is forecast up by $18.5 billion (0.7 percent) in nominal terms to $2.68 trillion in 2020. Farm assets are forecast to increase by $33.7 billion (1.1 percent) to $3.11 trillion in 2020, reflecting an anticipated 1.1-percent rise in farm sector real estate value. Farm debt in nominal terms is forecast to increase by $15.2 billion (3.6 percent) to $433.8 billion, led by an expected 5.5-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 decline 12.8 percent from 2019. When adjusted for inflation, farm sector equity is forecast to decline slightly in 2020, while assets and debt are forecast to increase.
Median Income of Farm Operator Households Forecast to Rise in 2019 and 2020
Total median farm household income is forecast to increase to $83,111 in 2019 and continue to increase in 2020, reaching $89,674. In percentage terms, that is a nominal increase of 14.7 percent (a 12.6 percent increase after inflation) between 2018 and 2019 and a subsequent rise of 7.9 percent (a 5.9 percent increase after inflation) in 2020. The forecast rises in 2019 and 2020 are notable because they follow a 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 $296 from -$1,735 in 2018 and is expected to continue to increase to $934 in 2020. Median farm income earned by farm households was negative each year from 1996 to 2018. The increase in median farm income in 2019 and 2020 is largely because of increases in government payments to farm operations. In 2019, the Market Facilitation Program provided financial assistance in response to trade disruptions. In 2020, supplemental and ad hoc disaster assistance programs—such as the Paycheck Protection Program (PPP) and Coronavirus Food Assistance Program (CFAP)—provided financial relief to those affected by the global COVID-19 pandemic.
As in previous years, many farm households rely on off-farm income. The median off-farm income is forecast to increase each year, up 6.3 percent to $70,000 in 2019 and up 3.1 percent to reach $72,187 in 2020. Like the median farm income forecast, the rise in median off-farm income is primarily because of COVID-19 relief distributed to most U.S. households through the Economic Impact Payments. 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.