The profitability of Nebraska agriculture in 2020 is a different story compared to previous years due to government payments.
At the beginning of 2020, the cash flow for even the top ⅓ of operations looked gloomy, according to data compiled by Nebraska Farm Business, Inc.
“By March, those numbers looked even worse,” said Tina Barrett, Executive Director of Nebraska Farm Business, Inc. “ It was hard to imagine how 2020 wasn’t going to be one of the toughest financially that we would experience in a long time.”
Low prices, coupled with the pandemic challenges, made early assessments of the year look somber.
“Obviously, that turned around quickly with prices rising quickly in the last half of the year and the significant government payment amounts,” said Barrett.
Barrett said the tough part about projecting early cash flow was the rising cost of production.
The range of accrual net farm income was similar to previous years, which was around $2 million. But According to the study, the range shifted upward with only 8.3% of farms recording negative income.
“While the averages show that every category ‘won’ in 2020, there were operations that were working through bankruptcy and those that were not able to take advantage of all that 2020 brought,” said Barrett.
Government relief payments from the COVID- 19 pandemic largely impacted agriculture numbers. The Nebraska Farm Business, Inc. study had three assessments:
- All categories of operations saw increasing income and a higher percentage from government payments in 2020 compared to previous years.
- Working capital to gross revenues rebounded to almost a green level on average for the first time in five years. The percentage of operations in the red was reduced dramatically.
- Thirty-three percent of the farms had a net income less than the government payments received.
Barrett said, “Financially, 2020 was kind to most producers. Profitability was up for almost everyone and liquidity took a large step forward in healing. The largest reason for these things, the government payments, isn’t likely to continue, which means the lessons learned from the increasing cost of production and debt will be vital to the success of operations over the next few years.”
You can read the full report at: https://agecon.unl.edu/cornhusker-economics/2021/2020-nebraska-income-averages
