The U.S. Department of Agriculture is projecting farm income will increase significantly this year, but that’s only because of an unprecedented amount of government payments that could top $40 billion.
The latest Farm Income Report from the USDA shows net farm will total $102 billion, a 23% increase over last year. But 36% of that money is coming from federal subsidies intended to make up for coronavirus losses.
Without that aid, net farm income would be down more than $10 billion this year.
Pat Westhoff, an agricultural economist at the University of Missouri, said it is short-term good news that farmers aren’t in a bad position.
“However, looking forward, there is a real concern on what happens next. If this proves to be the last round of these emergency payments, it will be a pretty steep table people are going to drop off of next year,” Westhoff said.
There are other positive signs for farmers. The cost of farming is down 1% this year, and ome commodity prices have rebounded since the beginning of the pandemic more than expected.
“Corn and soybean prices, for example, have been higher than we had anticipated. So that’s a positive thing that has happened,” Westhoff said. “So it’s always possible that market forces, weather, you name it, could result in different situations.”
Some analysts are predicting COVID-19 problems and massive government aid are only masking a bigger problem: increasing farm debt.
Harwood Schaffer and Daryll Ray of the Agricultural Policy Analysis Center at the University of Tennessee are predicting farm debt will increase by $15 billion.
“Without a program to raise crop prices, these debt increases will result in an ever-growing number of farm bankruptcies,” they wrote in their analysis of the USDA report.