Farmers and ranchers are expected to receive higher cash value for their crops and livestock in 2021, but direct government payments will fall this year, leading to an overall 8.1% decline in net farm income for the year, USDA projected Friday.
An early 2021 farm income forecast by USDA also coincided with a monthly and annual update on trade data by the U.S. Census Bureau. The Census Bureau showed record overall U.S. farm exports for 2020 with sales to China up 43% from 2019.
Looking at the USDA income forecast, net farm income — a broad measure of profits — is projected to drop $9.8 billion in 2021 after jumping $38 billion in 2020. Overall net farm income is expected to come in at $111.4 billion in 2021. The lower net income is tied to a projected 45% drop in direct government payments as farmers and livestock producers see higher sales for their products.
The forecast showing a dip in 2021 net farm income also boosted the 2020 net farm income from December’s projection by $1.6 billion to $121.2 billion. That put 2020 net farm income at the highest level since 2013.
Numbers from the U.S. Census Bureau on Friday show a record $161.17 billion in U.S. agricultural export sales for 2020, topping $159.17 billion in sales reached in 2018.
Globally, soybeans accounted for $25.7 billion in agricultural exports. Corn exports reached $9.2 billion in 2020, and wheat exports amounted to $6.3 billion.
U.S. pork exports topped $7.7 billion in 2020, up nearly 9.9% from 2019 sales. Exports of beef and beef products were $7.65 billion, down about $446 million, marking two consecutive years of declining beef exports. Dairy exports were $6.45 billion, up 8.2% from 2020.
For the phase-one agreement with China, agricultural exports reached a record $28.75 billion, up 43% from 2019 sales. The agreement signed last January by then-President Donald Trump had called for China to buy $36.5 billion in agricultural products in the first year of the agreement.
Among the agricultural sales to China, soybeans accounted for $14.16 billion or 49% of the total sales. Pork sales accounted for $2.28 billion and cotton sales were $1.83 billion. Corn sales also reached $1.21 billion while wheat sales were $570 million. Beef sales were $310 million.
FARM INCOME SUMMARY
Overall, USDA projects both crop farmers and livestock producers will see higher farm cash receipts in 2021. Crop farmers will see an $11.8 billion boost in crop cash receipts, up 5.8% from 2020, with the biggest boost coming from higher corn and soybean prices.
Soybean cash receipts are projected to increase $9.4 billion, or 24.3%, the biggest jump of any commodity. Corn sales are forecast to rise $6.7 billion, or 14%, from 2020. Wheat sales are expected to increase $200 million or 2.2%. Sorghum sales also will increase $200 million, or 12.3%, compared with 2020 cash receipts. Sugar beet sales also are expected to rise $300 million or 17%.
Livestock producers are projected to see an $8.6 billion boost in sales for cattle/calves, hogs and broilers, a 5.2% increase from 2020 sales.
Sales for cattle and calves are expected to increase $3.9 billion, or 6.4%, from 2020 with higher prices projected. Hog cash receipts are expected to increase $3.2 billion or 15%. Broiler receipts also increase $2.3 billion, or 10.6%, from 2020. Dairy sales, though, are expected to drop $800 million, or 2%, in 2021 because of a lower price forecast.
The big-ticket change in receipts, though, is a drop in direct government payments from $46.3 billion in 2020 to $25.5 billion in 2021 — a $21 billion decline, or 45.3% lower than last year. Most of the decline is because of lower expected supplemental and ad-hoc aid for farmers and ranchers tied to the COVID-19 pandemic. Congress and USDA provided extensive producer aid in 2020 through the Coronavirus Food Assistance Program (CFAP) payments. CFAP payments are projected to fall from $23.7 billion in 2020 to $2.5 billion for 2021.
Farm sector expenses are also expected to increase $8.6 billion in 2021, up about 2.5%, from 2020 levels. Labor expenses are forecast to increase $1.6 billion or 4.6%. Fertilizer and related expenses are expected to increase $1.4 billion, or 6%, from 2020. Livestock and poultry expenses are expected to increase $1 billion, or 3.6%, for the year. Fuel expenses are expected to increase $800 million, or 7%, for the year.
USDA released a statement Friday noting the farm income and trade numbers “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.”
The statement from USDA’s director of communications, Matt Herrick, added, “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.”
More details on the USDA Economic Research Service farm income and expense forecasts can be found here: https://www.ers.usda.gov/….