AFBF says high net farm income a ‘false positive’
The USDA expects 2020 net farm income to reach $120 Billion dollars but American Farm Bureau economist John Newton calls it a ‘false positive,’ “Because when you look at the $120-Billion you’d think that the farm economy was doing fantastic but cash receipts from crop and livestock sales actually declined $3-Billion and are at the lowest level since 2016.”
Production expenses are down slightly which Newton says helps a bit but the money’s not coming from the marketplace. He says while the government coronavirus packages (CFAP 1 & 2) helped farmers bridge the gap and things have luckily turned around on the back of strong exports, farmers are not out of the woods yet, “Looking into next year, we need demand to continue to improve. We need to find a cure for the Covid-19 pandemic. You know, we saw how quickly things can turn south in a hurry and we’ve seen how quickly things can get positive in a hurry.”
Newton urges farmers to put some of this away, “Get yourself in a better financial position but also plan for the uncertainty next year and get a good marketing and risk management plan in place.”
Newton says while export commitments are record setting, the cancellation of outstanding sales is still possible. He says one thing IS certain, profitability in 2021 will be lower.
USDA’s first projection for 2021 farm income and expenses comes out in February.