Direct farm payments inching closer to historic levels


Direct farm payments inching closer to historic levels

Recent analysis finds while direct payments to farmers are up significantly compared to the past two decades, payments remain a smaller portion of net farm income compared to the early ‘80s and ’90s.

Ag economist David Widmar with Ag Economic Insights tells Brownfield prior to President Trump’s trade war with China, direct farm payments ranged between $10 to $15 billion for mainly crop insurance and conservation programs.

“It looks like direct payments so far are on track to hit $31 billion here in 2020 which gets us close to those historic highs.”

Widmar’s estimate combines USDA’s February forecast along with expected payments from the Coronavirus Food Assistance Program.

“It’s really a reflection of the challenges hitting the farm economy.”

He says in 1983, historically high direct payments accounted for 65 percent of net farm income then declined to the 30 percent range and lower in the following decades.  In 2019, direct payments accounted for only 25 percent of net farm income while the total cost of programs inched toward historic levels.

Widmar says if commodity prices stay low, ARC and PLC payments could run higher than USDA’s last estimate and, if challenges like COVID-19 linger, farm policy might adapt yet again.

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