ERS: Farm income to decrease due to lower government payments
Net farm income, a broad measure of profits, is forecast to decrease $9.8 billion (8.1%) to $111.4 billion in 2021, the Agriculture Department’s Economic Research Service said.
In 2020, government payments related to the coronavirus pandemic boosted farm income. Cash receipts are forecast to increase in 2021, but lower direct government farm payments are expected to drive most of the decline.
Also contributing to the 2021 decline in net income are higher production expenses.
Total production expenses, including operator dwelling expenses, are forecast to increase $8.6 billion (2.5%) to $353.7 billion (in nominal terms) in 2021.
Most of this reflects higher spending on feed, fertilizer and labor, ERS said.
USDA also released positive export data.
“The farm income forecast and export data released today reflect a growing need to ramp up our focus on expanding existing markets to create new opportunities for farmers, ranchers and producers at home and abroad,” Matt Herrick, the Agriculture Department communications director, said in a news release.
“New market opportunities will ensure our producers are not so reliant on government support or the whims of a handful of trading partners. Ultimately, the data released today demonstrates growing export strength and a rebound in cash receipts for farmers — two positive stories owed largely to growing confidence in our economy.
“We need to build on that confidence moving forward by using the department’s resources to invest in developing new income sources in local and regional food systems; to open competition and ensure fairer markets for producers of all sizes and backgrounds, including Black, Hispanic, Indigenous and other farmers of color; and to put American farmers in the lead on climate solutions that create new streams of income while leading the world in sustainably produced food. All of these elements are necessary to create a more resilient food system and stronger rural economies built to withstand a pandemic or other future disruption.”
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