Farmers' financial earnings are expected to increase this year, but fewer government payments and increased production costs will likely offset higher cash receipts, USDA's Economic Research Service said Thursday in its Farm Sector Income forecast.
Net farm income is expected to rise $18.5 billion this year to $113 billion, which would be its highest point since 2013. Net cash farm income, which more closely tracks producers’ cash flow, is forecast at $134.7 billion for 2021. That number is up $6.4 billion from February’s forecast and would be an increase of 21.5% from 2020's $110.9 billion.
Net cash farm income is based on cash receipts from farming, plus government payments and other farm-related income, minus cash expenses. Net farm income also factors in depreciation and changes in inventory values.
Corn, soybean, wheat, sugar beet, and sorghum receipts are all projected to increase, with total crop receipts projected to rise by $37.9 billion. "When combined, soybean and corn receipts are forecast to increase by $36.3 billion (43.6 percent) in 2021, accounting for most of the forecasted growth in crop cash receipts," ERS said.
Higher broiler, hogs, and cattle receipts will push total animal receipts to $191.5 billion in 2021, a $26.5 billion jump from 2020.
For “corn receipts in 2021, our forecast would put them at their highest level since 2013, but they would be below peak levels that we saw in 2011 through 2013,” USDA Economic Research Service economist Carrie Litkowski said during a webinar Thursday.
The numbers paint a rosy picture for farm income this year, but University of Missouri agricultural economist Ben Brown stated that not all sectors of the farm economy are seeing positive trends.
"I do want to caution, there are sectors, cow/calf, poultry, dairy, specialty crops that are facing some troubles or at least a downturn from expectations in February," Brown told Agri-Pulse, referring to net income per farm by commodity. He also noted there are geographical struggles like the drought in the Northwest affecting livestock producers and other crops.
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Receipts for cotton, vegetables and melons, and fruits and nuts also are projected to drop, according to USDA. “We have a pretty steady trend of downward cash receipts for fruits and nuts,” Litkowski noted, pointing to data trends since 2000.
Cattle and calves, hog, and broiler cash receipts are expected to increase compared to last year, USDA noted, but Brown said these industries are also facing higher feed costs.
“Costs have in general increased this year pretty dramatically, and that’s cut into some of these profits for some of these operations, especially on the livestock side,” he said, noting cost projections were up from February.
Higher prices for row-crop commodities are pushing an expected increase in feed expenses of $6.2 billion, to $63.1 billion, USDA data showed. Government officials expect farm production expenses to rise to $383.5 billion this year, a $26.1 billion increase over 2020, the highest point since 2016 but not above 2014 levels.
Fewer direct government payments to producers will also offset increases.
Direct payments to farmers are expected to drop to $28 billion this year after hitting a peak of $45.7 billion in 2020, a roughly 39% decrease.
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