Another projected increase in net farm income, but there’s more to the story
USDA projects net farm income to increase $35 billion from 2019, but an ag economist says there’s more to the story.
David Widmar is with Ag Economics Insights. “Not everyone is doing better,” he says. “The rising tide hasn’t lifted all ships equally. Livestock has been particularly hard hit, the infusion of direct payments is positive, but it hasn’t been uniform across all commodities.”
He tells Brownfield much of the net farm income for 2020 came from historically high direct payments. “These are ad-hoc payments, which means there is nothing on the books beyond the traditional ARC and PLC,” he says. “For context, we’re at $40-plus-billion for direct payments, the traditional farm bill would be somewhere around $10, $12, maybe up to $14-billion dollars.”
Widmar says as producers start to make plans for 2021 the uncertainty and volatility aren’t going away anytime soon. “Even though we’re on the upside of this, farmers need to remember how concerning and challenging things were six months ago,” he says. “We need to shore up our risk management plans, but also prepare for what could be a bumpy ride ahead.”
If realized, net farm income in 2020 would be at its highest level since 2013 and 32 percent above the 2000 to 2018 average of $90.6-billion.
AUDIO: David Widmar, Ag Economic Insights