Farm income predicted to increase nearly 23% from last year, mainly because of direct government payments

"Despite the pandemic, or because of government response to it, the U.S. farm sector is projected to have stronger income for 2020 than a year ago," Chris Clayton reports for DTN/The Progressive Farmer. "The latest projections for U.S. net farm income for 2020 show a nearly 23 percent increase from 2019 levels due to higher government payments to farmers and lower interest expenses," according to the 2020 Farm Sector Income Forecast, which the U.S. Department of Agriculture's Economic Research Service released Wednesday.

Here are some of the report's major findings:

• Net farm income, a broad measure of profits, is projected to reach $102.7 billion in 2020, an increase of $19 billion or 22.7% over the past year. 
• Net cash farm income, a more precise measure of profits, is predicted to increase $4 billion, or 3.6%. 
• If both the income projections pan out, both results would be above the average from 2000-2019, when adjusted for inflation.
• Farm cash receipts are forecast to decrease $12.3 billion (3.%) to $358.3 billion.
• Total animal/animal product receipts are expected to drop $14.3 billion (8.1%). 
• Total crop receipts are projected to increase $2 billion (1%) from 2019.
• Receipts for fruits and nuts are expected to increase while receipts for corn, wheat, cotton and soybeans are expected to decline.
• Direct government payments to farms are predicted to reach $37.2 billion, a $14.7 billion, or 65.7%, increase. Those include federal farm program payments made directly to farmers and ranchers but exclude USDA loans and insurance indemnity payments from the Federal Crop Insurance Corporation.
• Total production expenses (including expenses associated with operator dwellings) are projected to decrease $4.6 billion, or 1.3% to $344.2 billion.
• Interest expenses are forecast to decrease $5.6 billion, or 27.1%.
• Livestock and poultry purchases are expected to decrease $2.1 billion, or 7.5%.
• Fertilizer expenses are predicted to increase $1.3 billion, or 5.7%.
• Cash labor expenses are forecast to increase $1.1 billion (3.1%).
• Farm sector debt is expected to increase 3.6% to 433.8 billion.
• Real estate debt is forecast to increase 5.5% to 281.6 billion.