U.S. net cash farm income, the total income after expenses, is forecast to decrease $13.1 billion to $109.6 billion in 2020. When adjusted for inflation, the drop is almost 11 percent compared to the previous year. U.S. net farm income is a broader measure of profitability.
It incorporates noncash items like economic depreciation and gross imputed rental income, and it forecast to increase by $1.4 billion to $96.7 billion in 2020. That’s a 1.4 percent jump over 2019. The USDA says if the forecast changes are accurate, net cash farm income in 2020 would be 0.6 percent below the inflation-adjusted average calculated throughout 2000-2018. Net farm income would be 5.4 percent above the average during 2000-2018. The two income measures will diverge this year because of how net sales from inventories are treated.
Net cash farm income records the income in the year a sale took place, while net farm income counts it in the year production occurred. For example, high net sales at $14.9 billion from crop inventories forecast in 2019 are expected to boost net cash farm income significantly that year. Very low net sales from inventories ($0.5 billion) in 2020 are expected to contribute to a decrease in net cash farm income between the two years.
USDA’s Farm Service Agency encourages producers to enroll now in the Agriculture Risk Loss (ARC) and Price Loss Coverage (PLC) programs. March 15, 2020 is the enrollment deadline for the 2019 crop year.
Although more than 200,000 producers have enrolled to date, FSA anticipates 1.5 million producers will enroll for ARC and PLC. By enrolling soon, producers can beat the rush as the deadline nears. FSA Administrator Richard Fordyce says, “please do not wait to start the enrollment process,” adding producers “need to begin the program election and enrollment process now.”
ARC and PLC provide financial protections to farmers from substantial drops in crop prices or revenues and are vital economic safety nets for most American farms. Until March 15, producers who have not yet enrolled in ARC or PLC for 2019 can enroll for both 2019 and 2020 during the same visit to an FSA county office unless yield updates are requested. Additionally, farm owners have a one-time opportunity to update PLC payment yields that take effect beginning with crop year 2020.
USDA’s National Agricultural Statistics Service (NASS) will re-contact respondents who previously reported acreage not yet harvested in Michigan, Minnesota, North Dakota, South Dakota, and Wisconsin in the spring, once producers are able to finish harvesting remaining acres. If the newly collected data justifies any changes, NASS will update the Jan. 10 estimates in a future report. Stocks estimates are also subject to review since unharvested production is included in the estimate of on-farm stocks.
When producers were surveyed for the Crop Production 2019 Summary there was significant unharvested acreage of corn in Michigan, Minnesota, North Dakota, South Dakota, and Wisconsin; and soybean acreage not yet harvested in Michigan, North Dakota, and Wisconsin. The unharvested area and expected production were included in the totals released on Jan. 10.
As a result of this work, NASS may release updated acreage, yield, production, and stocks estimates for corn and soybeans later this spring. Because farmers’ ability to complete harvest is impacted by winter weather, timing of the re-contacts and subsequent publication schedule will be announced at a later date.
The land market in 2019 continued the plateau trend of the past several years, where the supply of agricultural land for sale on the market remained lower than average, and prices for good quality cropland held mostly steady.
Farmers National Company says farmland sale activity in the first part of 2019 was slower than it had been for some time with late spring and early summer, especially void of farms for sale. Planting delays and prevent plantings contributed to the sluggish activity. However, despite the slower land market, Farmers National Company and its agents saw a 25 percent increase in acres sold in 2019 from the prior year and the most since 2014.
Several factors will impact the 2020 land market, according to Randy Dickhut of Farmers National. He says Interest rates are low and are poised to remain so during the foreseeable future. Overall, he says, “agriculture is in adequate financial shape, but there are individual and regional concerns.”