December 29, 2019

USDA forecasts high farm income following federal payouts

USDA forecasts high farm income following federal payouts

The USDA Economic Research Service recently released its 2019 Farm Sector Income Forecast, which predicts that U.S. net farm income will reach a new high since the last commodity boom in 2013. This income was boosted by $14.5 in federal payments to producers affected by new tariffs and recent natural disasters.

USDA Economic Research Service senior economist Carrie Litkowski spoke with reporters on Nov. 27 to give context to the forecast numbers. She explained that direct payments to producers are expected to increase to $22.4 billion this year, the highest rate paid out since 2005 and a 64% increase over 2018.

Highlights from the forecast:

  • Overall, farm cash receipts are forecast to increase $2.2 billion (0.6 percent) to $374.2 billion in 2019. Total animal/animal product receipts are expected to increase $0.3 billion (0.1 percent) and total crop receipts are expected to increase $1.9 billion (1.0 percent) from 2018 levels.
  • Direct government farm payments—which include Federal farm program payments paid directly to farmers and ranchers but exclude USDA loans and insurance indemnity payments made by the Federal Crop Insurance Corporation (FCIC)—are forecast to increase $8.8 billion (64.0 percent) to $22.4 billion in 2019, following an additional round of payments from the Market Facilitation Program in 2019.
  • Total production expenses, including expenses associated with operator dwellings, are forecast to increase $0.7 billion (0.2 percent) in 2019 to $344.6 billion. After adjusting for inflation, total production expenses are forecast to decrease by $5.5 billion (1.6 percent).
  • Farm sector equity is expected to increase by 2.2 percent to $2.68 trillion in nominal terms.
  • Debt-to-asset levels for the sector are forecast to rise again in 2019, continuing an annual upward trend in place since 2013.

For animal and animal products, USDA forecasts that receipts will be relatively unchanged in 2019: “Total animal/animal product cash receipts are expected to rise $0.3 billion (0.1 percent) to $176.8 billion in 2019 in nominal terms. After adjusting for inflation, however, cash receipts are expected to fall $3.0 billion (1.7 percent). Milk and hogs are expected to lead the sector, offset by lower receipts for poultry/eggs.”