Farm Sector Income

2020 Farm Income Forecast Looks ‘Average’

Clint Thompson Economy

U.S. net farm income is forecast to increase to $96.7 billion in 2020.

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% compared to the previous year.

U.S. net farm income is a broader measure of profitability. It incorporates non-cash 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% jump over 2019. The USDA says if the forecast changes are accurate, net cash farm income in 2020 would be 0.6% below the inflation-adjusted average calculated throughout 2000-2018. Net farm income would be 5.4% 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.

(From the National Association of Farm Broadcasters)