U.S. Farm Income Outlook: September 2020
September 23, 2020
Forecast
Randy Schnepf
Two major indicators of U.S. farm well-being are net farm income and net cash income. Net farm
Specialist in Agricultural
income represents an accrual of the value of all goods and services produced on the farm during
Policy
the year—similar in concept to gross domestic product. In contrast, net cash income uses a cash

flow concept to measure farm well-being: only cash transactions for the year are included. Thus,
crop production is recorded as net farm income immediately after harvest—irrespective of

whether the crop is stored on farm or sold—whereas net cash income records a crop’s value only
after it has been sold in the marketplace.
This report uses the U.S. Department of Agriculture’s (USDA’s) farm income projections (as of September 2, 2020) to
describe the U.S. farm economic outlook.
USDA Farm Income Projections as of September 2, 2020
The most recent aggregate national net farm income projections for calendar year 2020 were issued
by USDA’s Economic Research Service (ERS) on September 2, 2020. This is the second of three ERS
forecasts for 2020: the first farm income forecast was announced on February 5, 2020. The third
forecast is expected to be released on November 27, 2020.
According to the Economic Research Service (ERS), national net farm income is forecast at $102.7 billion in 2020, up $19.0
billion (+22.7%) from 2019, driven by projected record federal support of $37.2 billion, including $10.4 billion from farm
programs authorized under the 2018 farm bill (P.L. 115-334) and $25.8 billion from ad hoc programs authorized outside of
traditional farm omnibus legislation. An alternate measure, net cash income—focused on cash flows—is forecast at $115.2
billion (+4.5% from 2019).
Both projected net farm income and net cash income increase because of growth in government assistance in 2020, which
includes $3.8 billion of 2019 Market Facilitation Program (MFP) payments, $5.8 billion from the Paycheck Protection
Program (PPP), and $16 billion from the Coronavirus Food Assistance Program (CFAP). If realized, the 2020 government
payments of $37.2 billion would represent a 65.7% increase from 2019’s $22.4 billion in government support and would
surpass the previous record of $23.2 billion (nominal dollars) in 2000.
Farm asset value in 2020 is projected at $3.1 trillion, up year-to-year by 1.1%. Farm asset values reflect farm investors’ and
lenders’ expectations about long-term profitability of farm sector investments. Another measure of the farm sector’s well-
being is aggregate farm debt, which is projected to be at a record $433.8 billion in 2020—up 3.6% from 2019. Both the debt-
to-asset and the debt-to-equity ratios have risen for eight consecutive years, potentially suggesting a continued slow erosion
of the U.S. farm sector’s financial situation. At the farm household level, average farm household incomes have been well
above average U.S. household incomes since the late 1990s. However, this advantage derives primarily from off-farm income
as a share of farm household total income.
The final prospects for the 2020 farm income outlook are still clouded by several critical uncertainties. First, the extent o f
weather-related effects on yields and harvested acres will not be known until the harvest is completed and the size of the
major field crops has been assessed—most likely not before January 2021. Second, the extent to which the Coronavirus
Disease 2019 (COVID-19) pandemic will resurge again in the fall when cooler weather forces more people indoors is
unknown. Third, also related to the COVID-19 pandemic, is when and how the general economy will recover and consumer
demand patterns return to normal. Fourth is whether agricultural and food supply chains emerge in a more resilient and
responsive form that revives investment and growth at both the producer and retail levels. Finally, despite the signing of a
Phase I trade agreement with China on January 15, 2020, it is unclear how soon —if at all—the United States may resume
normal trade with China.
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Introduction
The U.S. farm sector is vast and varied. It encompasses production activities related to traditional
field crops (such as corn, soybeans, wheat, and cotton) and livestock and poultry products
(including meat, dairy, and eggs), as wel as fruits, tree nuts, and vegetables. In addition, U.S.
agricultural output includes greenhouse and nursery products, forest products, custom work,1 and
other farm-related activities. The intensity and economic importance of each of these activities, as
wel as their underlying market structure and production processes, vary regional y based on the
agroclimatic setting, market conditions, and other factors. As a result, farm income and rural
economic conditions may vary substantial y across the United States.
Annual U.S. net farm income is the single most-watched indicator of farm sector wel -being, as it
captures and reflects the entirety of economic activity across the range of production processes,
input expenses, and marketing conditions that have prevailed during a specific time period.2
When national net farm income is reported together with a measure of the national farm debt-to-
asset ratio, the two summary statistics provide a quick and widely referenced indicator of the
economic wel -being of the national farm economy.
USDA’s September 2020 Farm Income Forecast
In the second of three official U.S. farm income outlook releases scheduled for 2020 (see box
“ERS’s Annual Farm Income Forecasts” in the Appendix), the U.S. Department of Agriculture’s
(USDA’s) Economic Research Service (ERS) projects that U.S. net farm income wil rise 22.7%
year-over-year in 2020 to $102.7 bil ion, up $19.0 bil ion from last year (Figure 1 and Figure 2).3
This projected increase is driven largely by record government subsidies to the sector of $37.2
bil ion, including $10.4 bil ion from farm programs authorized under the 2018 farm bil (P.L. 115-
334) and $25.8 bil ion from ad hoc programs authorized outside of traditional farm omnibus
legislation.
The September forecast of $102.7 bil ion is 13.1% above the 10-year average of $90.8 bil ion (in
nominal dollars) but is below 2013’s record high of $123.7 bil ion. An alternate farm income
measure, net cash income (calculated on a cash-flow basis), is projected at $115.2 bil ion in 2020,
up 4.5% from 2019 but slightly below the 10-year average of $116.0 bil ion.4
The divergence in year-to-year changes between the two measures of net income is due to their
different treatment of harvested crops. Net farm income includes a crop’s value after harvest even
if it remains in on-farm storage. In contrast, net cash income includes a crop’s value only when it
is sold. Thus, crops placed in on-farm storage are included in net farm income but not net cash
income.
The 2020 net cash income forecast of $115.2 bil ion includes $1.1 bil ion in sales from on-farm
inventories. This is in contrast with 2019 net cash income, when $13.7 bil ion in sales of on-farm
crop inventories helped to inflate the 2019 net cash income value to $110.3 bil ion.

1 Custom work involves performing all the machine operations for another landowner in exchange for a set fee or rate.
2 See box “Measuring Farm Profitability” in the Appendix for a definition of net farm income. T he appendix also
includes supporting tables and charts that provide additional details on the Economic Research Service (ERS) farm
income forecast.
3 ERS’s 2020 farm sector income forecast s are available at https://www.ers.usda.gov/topics/farm-economy/farm-sector-
income-finances/farm-sector-income-forecast/.
4 See the Appendix for a description of the differences between net farm income and net cash income.
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U.S. Farm Income Outlook: September 2020 Forecast

Figure 1. Annual U.S. Farm Sector Nominal Income, 1940-2020F

Source: Economic Research Service (ERS), “2020 Farm Income Forecast,” September 2, 2020. Al values are
nominal—that is, not adjusted for inflation. Values for 2020 are forecast; F = forecast.
Figure 2. U.S. Farm Sector Inflation-Adjusted Income, 1940-2020F

Source: ERS, “2020 Farm Income Forecast,” September 2, 2020. Al values are adjusted for inflation using the
chain-type gross domestic product (GDP) deflator, where 2019 = 100. Bureau of Economic Analysis, Real GDP
Chained Dol ars (accessed December 3, 2019). Values for 2020 are forecasts.
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Highlights for the 2020 Farm Income Outlook
 For historical perspective, both net cash income and net farm income achieved
record nominal highs in 2013 but fel to recent lows in 2016 (Figure 1) before
trending higher during 2017-2020.
 When adjusted for inflation and represented in 2019 dollars (Figure 2), both the
net farm income and net cash income for 2019 are projected to be above their
average values since 1940 of $88.4 bil ion and $101.2 bil ion, respectively.
 Cash receipts for crop and livestock production activities in 2020 are projected to
be down 3.3% (Table A-1) due to a forecast decline of $14.3 bil ion in livestock
receipts, which more than offsets a modest $2 bil ion gain in crop receipts.
 USDA forecasts farm prices for grain crops to be 1% to 5% lower for the 2020-
2021 marketing year; while prices for cattle and calves (-8.1%), hogs (-17.8%),
and broilers (-20%) are projected down sharply in the 2020 calendar year. Prices
for eggs, sorghum, and soybeans and products (soyoil and soymeal) are projected
to be higher in 2020/2021 (Table A-4).
 Government farm subsidies are projected at a record $37.2 bil ion in 2020
(Figure 10). In 2020, support from traditional farm programs is bolstered by
large, ad hoc direct government payments in response to the Coronavirus Disease
2019 (COVID-19) pandemic.5 Government payments are projected to account for
36.2% of net farm income—the largest since a 31% share in 2005 (Figure 9).6
 Production expenses are forecast to be $4.9 bil ion lower in 2020 as costs for
livestock and poultry replacements, pesticides, interest costs, and fuel are al
projected to be lower.
 Farm asset values and debt levels are projected to reach record levels in 2020—
asset values at $3.1 tril ion (+1.1% year-over-year) and farm debt at $433.8
bil ion (+3.6%)—pushing the projected debt-to-asset ratio up to 14.0%, the
highest level since 2002 (Figure 17).
 Abundant domestic and international supplies of grains and oilseeds, coupled
with the severe demand shock related to COVID-19, are expected to contribute to
a sixth-straight year of relatively weak commodity prices in 2020 (Figure A-1
through Figure A-4). However, the commodity price projections for 2020 are
subject to substantial uncertainty associated with as-yet-unknown domestic
production and international commodity market developments.
 Economists project that the COVID-19 pandemic could trim global economic
growth by 3.0% to 6.0% in 2020, with a partial recovery in 2021, assuming there
is not a second wave of infections.7 Global trade could also fal by 18%,
depending on the depth and extent of the global economic downturn.
 The COVID-19 supply chain disruption dominated U.S. agricultural markets
during the first half of 2020 and has contributed to uncertainty over the supply,
demand, and price prospects for most major commodities. Prospects for large
corn and soybean harvests and the outlook for large ending-of-year stocks

5 CRS Report R46395, USDA’s Coronavirus Food Assistance Program (CFAP) Direct Payments.
6 Indirect subsidies such as crop insurance premium subsidies are not included in the $37.2 billion subsidy total.
7 CRS Report R46270, Global Economic Effects of COVID-19.
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(Figure 3) combine with lingering international trade disputes to reduce market
optimism heading into the fal harvest.
Major Economic and Policy Developments Set the Stage
Several major economic and policy events have occurred since 2018 that have helped to shape the
current U.S. farm income outlook for 2020. These events are briefly reviewed here.
 Since 2015, the corn, soybean, and wheat sectors have experienced relatively
strong growth in both productivity and output, helping to build stockpiles at the
end of several successive marketing years through the 2019 season (Figure 3),
while upland cotton saw its end-of-year stocks surge in 2019.
 In 2018, the U.S.-China trade dispute emerged as an impediment to trade and
contributed to lower soybean prices.8 The U.S.-China trade dispute led to
declines in U.S. exports to China—a major market for U.S. agricultural
products—in 2018 and 2019 and have added to market uncertainty in 2020.
 The difficulties associated with the trade dispute were exacerbated in 2018 when
U.S. farmers produced a record soybean harvest of 4.4 bil ion bushels and both
record ending-of-year stocks and a record stocks-to-use ratio (22.9%) (Figure 3).
The record soybean harvest combined with the sudden loss of the Chinese
soybean market kept downward pressure on U.S. soybean prices. Despite a
smal er crop and lower stocks in 2019, the reduction in U.S. soybean exports to
China prevented a price recovery.
 Coming into 2020, the U.S. agricultural sector was holding relatively large stocks
of corn, soybeans, wheat, and cotton—the four largest commercial crops
produced annual y in the United States in terms of area harvested, volume of
output, and value.9 The abundant supplies relative to demand contributed to weak
commodity prices over this period (Figure A-1 and Figure A-2).
 In response to the U.S.-China trade dispute, USDA used its authority under the
Commodity Credit Corporation (CCC) Charter Act10 to initiate successive direct
payment programs in 2018 and 2019—referred to as Market Facilitation
Programs (MFPs)—to partial y offset the trade damage incurred by U.S.
producers.11 As of August 31, 2020, USDA had paid out $8.6 bil ion under the
2018 MFP and $14.5 bil ion under the 2019 MFP.12
 On January 15, 2020, President Trump signed a “Phase I” executive agreement
with the Chinese government on trade and investment issues, including

8 CRS Report R45929, China’s Retaliatory Tariffs on U.S. Agriculture: In Brief.
9 T he U.S. hay crop exceeds the U.S. cotton crop in area, volume, and value but is less commercially traded and is used
primarily by the livestock sector. In recent years, two specialty crops—grapes and almonds—have rivaled cotton for
fourth place in terms of the value of production, depending on market prices and production.
10 CRS Report R44606, The Commodity Credit Corporation: In Brief.
11 T he 2018 Market Facilitation Program (MFP) was authorized by Agriculture Secretary Sonny Perdue at up to $12
billion in financial assistance, including up to $10 billion in direct payments; see CRS Report R45310, Farm Policy:
USDA’s 2018 Trade Aid Package. T he 2019 MFP was authorized by Secretary Perdue at up to $16 billion in financial
assistance, including up to $14.5 billion in direct payments; see CRS Report R45865, Farm Policy: USDA’s 2019
Trade Aid Package.
12 Data are as of August 31, 2020; USDA, Farm Service Agency (FSA), “ Market Facilitation Program,” at
https://www.farmers.gov/manage/mfp.
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U.S. Farm Income Outlook: September 2020 Forecast

agriculture.13 The agreement was expected to improve market access for U.S.
products into China, including a commitment by China to import $32 bil ion
worth of additional U.S. agricultural products (relative to a 2017 base of $24
bil ion) over a two-year period. The Phase I agreement was expected to provide
improved opportunity for certain U.S. exporters; however, there is uncertainty
over whether the agreement may lead to a rearrangement of global trading
patterns rather than create new market demand.
 In mid-January 2020, COVID-19 first appeared in the United States and spread
rapidly through the country. The COVID-19 pandemic produced an aggregate
demand shock across the U.S. economy, including the agricultural sector.14
 The COVID-19 pandemic induced widespread business closures, massive lay-
offs, and 2020 gross domestic product (GDP) declines of -4.8% for the first
quarter (annualized basis) and -31.7% for the second quarter.15 In August 2020,
24.2 mil ion persons were unable to work because their employer closed or lost
business due to the pandemic, and the overal U.S. unemployment rate was
8.4%.16
 COVID-19 lockdowns caused widespread supply chain disruptions that shifted,
and in some cases stopped, the flow of agricultural commodities through the
various supply chains and led to sharp price declines and considerable market
uncertainty.
 The principal impact on feed grains, oilseeds, and fiber was primarily the result
of the COVID-19 demand shock on food demand and retail purchasing.17 The
short-run impact was lower prices, stock building of grains and oilseeds, and a
temporary backup of unmarketable surpluses of market-ready livestock and
poultry, as wel as perishable fruits and vegetables.
 In response to the COVID-19 pandemic, on April 17, 2020, USDA initiated the
Coronavirus Food Assistance Program (CFAP1) valued at $19 bil ion, including
$16 bil ion in direct payments to affected producers and $3 bil ion for food
purchases and distribution.18 As of September 20, 2020, USDA had made $10.1
bil ion in direct payments under CFAP1.19
 On September 18, 2020, USDA announced a second CFAP payment program
(CFAP2) with funding of up to an additional $14 bil ion. Sign up for CFAP2
began on September 21 and runs through December 11, 2020.20

13 CRS In Focus IF11412, U.S.-China Phase I Deal: Agriculture.
14 CRS Report R46347, COVID-19, U.S. Agriculture, and USDA’s Coronavirus Food Assistance Program (CFAP).
15 GDP growth estimates are on an annualized basis, from U.S. Bureau of Economic Analysis, “ Gross Domestic
Product, 2nd Quarter 2020 (Second Estimate); Corporate Profits, 2 nd Quarter 2020 (Preliminary Estimate),” BEA 20-41,
news release, August 27, 2020.
16 U.S. Bureau of Labor Statistics, “ T he Employment Situation—August 2020,” USDL-20-1650, September 4, 2020.
17 T odd Hubbs and Scott Irwin, “Crop Markets Suffer Massive Demand Shock from COVID-19,” Economic Impact of
COVID-19 on Food and Agricultural Markets, CAST Commentary, June 2020.
18 For information on the April 17, 2020, USDA-initiated Coronavirus Food Assistance Program (CFAP1), see CRS
Report R46395, USDA’s Coronavirus Food Assistance Program (CFAP) Direct Paym ents.
19 USDA, Coronavirus Food Assistance Program Data, “CFAP Dashboard,” September 13, 2020, at
https://www.farmers.gov/cfap/data.
20 For more information, see USDA, “ USDA to Provide Additional Direct Assistance to Farmers and Ranchers
Impacted by the Coronavirus,” press release no. 0378.20, September 18, 2020, at https://www.usda.gov/media/press-
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 The Trump Administration announced several other new programs in response to
the COVID-19 pandemic, including $349 bil ion in funding to support the Smal
Business Administration’s (SBA’s) lending programs and to create a new
Paycheck Protection Program (PPP).21 The PPP was intended to provide short-
term, low-interest loans that could be forgiven under specified circumstances to
qualifying smal businesses (including agricultural firms) and nonprofits. As of
August 8, 2020, the PPP had made $7.3 bil ion in potential y forgivable loans to
agriculture-related enterprises.22
 The long-run impact of the COVID-19 pandemic wil depend on how quickly the
economy recovers from Depression-level high unemployment and widespread
restaurant and retail business shutdowns. A slow economic recovery coupled with
the extent of a resurgence of the COVID-19 pandemic in the fal loom over
recovery prospects for both the U.S. economy and the U.S. agricultural sector.
Summary of the 2020 Economic Outlook
The final prospects for commodity prices and the farm income outlook in 2020 are stil clouded
by several critical uncertainties. First, the extent of weather-related effects on yields and
harvested acres wil not be known until the harvest is completed and the size of the major field
crops has been assessed—most likely by January 2021. Second, the extent to which the COVID-
19 pandemic wil resurge again in the fal when cooler weather forces more people indoors is
unknown. Third, also related to the COVID-19 pandemic, is when and how the general economy
wil recover and consumer demand patterns return to normal. Fourth is whether agricultural and
food supply chains resuscitate themselves in a more resilient and responsive form that revives
investment and growth at both the producer and retail ends. Final y, despite the signing of a Phase
I trade agreement with China on January 15, 2020, it is unclear how soon—if at al —the United
States may resume normal trade with China.
U.S. Crop Developments and Outlook for 2020
This section reviews the major highlights of the crop growing season from the pre-planting period
until early September, just prior to major harvesting activity for corn and soybeans.
Key market developments in 2020 include the following:
 U.S. crop producers entered the 2020 year with large stocks (held over from 2019
and earlier harvests) relative to demand for the major grains, oilseed, and fiber
crops—corn, wheat, soybeans, and upland cotton (Figure 3).
 The United States and China signed the Phase I trade agreement on January 15,
2020. This fueled farmers’ optimism for 2020 and contributed to early
projections in March for large planted acres in 2020, including 97.0 mil ion acres
for corn (up 8.1% from 2019), 83.5 mil ion for soybeans (+9.7%), 44.7 mil ion

releases/2020/09/18/usda-provide-additional-direct -assistance-farmers-and-ranchers.
21 For information on the federal response to the Coronavirus Disease 2019 (COVID-19) pandemic for different sectors
of the U.S. economy, visit the CRS COVID-19 Resources page at https://www.crs.gov/Resources/coronavirus-disease-
2019.
22 T he Small Business Administration (SBA) stopped taking Paycheck Protection Program (PPP) applications on
August 8, 2020. Final loan data for PPP reported here were obtained via a Freedom of Information Act request by an
anonymous nongovernmental organization and shared with CRS.
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U.S. Farm Income Outlook: September 2020 Forecast

for wheat (-1.1%), 13.7 mil ion for cotton (unchanged), and 319.1 mil ion total
area planted to principal crops (+5.4%).23
Figure 3. Stocks-to-Use Ratios and Farm Prices: Corn, Soybeans, Wheat, and Cotton

Source: USDA, World Agricultural Outlook Board, World Agricultural Supply and Demand Estimates, September 11,
2020. Al values are nominal. Values for 2020 are forecasts, in dark blue, and separated from historical data.
Notes: Stocks-to-use equals the ratio of season-ending stocks relative to the season’s total usage. Data are
reported on a market-year basis—the market year is the 12-month period that begins at harvest time, during which
the harvested crop is either stored or used on farm or sold in the marketplace. For corn and soybeans, the market
year starts in September and runs through August of the fol owing year. Wheat data are on a June-May market year
basis, and upland cotton data are on an August-July market year.
 Planted acres were limited in 2020 for major field crops by a second year of
above-normal prevented planting estimated at over 10 mil ion acres.24 In 2019, a
record 19 mil ion acres of prevented planting acres were recorded.25 By
comparison, from 2000 to 2018, prevent planting averaged 4.1 mil ion acres
annual y.

23 National Agricultural Statistics Service (NASS), USDA, Prospective Plantings, March 31, 2020. Principal crops
include corn, sorghum, oats, barley, rye, winter wheat, Durum wheat, other spring wheat, rice, soybeans, peanuts,
sunflower, cotton, dry edible beans, chickpeas, potatoes, sugarbeets, canola, proso millet , all hay, tobacco, and
sugarcane; but also includes double cropped acres and unharvested small grains planted as cover crops.
24 Farm Service Agency (FSA), USDA, “FSA Crop Acreage Data Reported to FSA, 2020 Crop Year,” September 1,
2020.
25 CRS Report R46180, Federal Crop Insurance: Record Prevent Plant (PPL) Acres and Payments in 2019 .
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 In June, farmers reported that 311.9 mil ion acres were planted to principal crops
(up 3.1% from 2019, but down over 7 mil ion acres from the March survey of
intentions) including 92.0 mil ion to corn (+2.6%), 83.8 mil ion to soybeans
(+9.7%), 44.3 mil ion to wheat (-2.0%), and 12.2 mil ion to cotton (-11.3%).26
 Except for the prevent planting acreage mentioned earlier, most principal crops
were planted on time and under good soil moisture conditions. In August,
USDA’s initial outlook projected a record corn crop of 15.3 bil ion bushels and a
near-record large soybean crop of 4.4 bil ion bushels.27 Forecasts for both crops
included record yields of 181.8 and 53.3 bushels per acre, respectively, for corn
and soybeans. This initial forecast included declines in market-year average farm
prices (MYAPs) for corn to $3.10 per bushel (-13.9% from 2019) and for
soybeans to $8.35 per bushel (-2.3%) for 2020.
 In mid-July, widespread hot, dry conditions set in over much of the western
United States, including portions of the Corn Belt—that is, the Dakotas,
Nebraska, Iowa, and northern Il inois (Figure 4). These poor growing conditions
began to negatively impact yields for corn and soybeans.
 On August 10, a large derecho storm system plowed through the Midwest.28
Early news reports suggested substantial damage, including approximately 10
mil ion acres of corn and soybeans, roughly a third of Iowa’s total cropland,
damaged by rain, hail, and wind.
 As a result of the unexpected weather developments, USDA, in its September
crop report, lowered yields, acres, and production for both corn and soybeans to
reflect the hot, dry conditions and the effects of the derecho across Iowa. In
particular, national corn and soybean estimated yields were reduced to 178.5 and
51.9 bushels per acre, respectively. The harvested-corn acreage estimate was
lowered to 83.473 mil ion acres, a reduction of 550,000 acres—al from Iowa.
Soybean acres were left unchanged. MYAPs were revised substantial y upward to
$3.50 per bushel for corn and $9.25 per bushel for soybeans.
 Starting in mid-August, China began to make large purchases of U.S. corn and
soybeans.29 While much uncertainty remains about the eventual size of Chinese
grain and oilseed imports, market optimism and concerns about weather-related
production issues fueled a rise in commodity prices in the U.S. futures market
that began in mid-August (starting on August 12) and have pushed soybean
prices for the nearby futures contract to surpass $10 per bushel on September
14.30

26 NASS, USDA, Acreage, June 30, 2020.
27 USDA, World Agricultural Outlook Board (WAOB), World Agricultural Supply and Demand Estimates (WASDE),
August 12, 2020.
28 A derecho is a weather event caused by severe thunderstorms and often characterized by 70 -100 mph straight-line
winds. Krissa Welshans, “ Derecho storm causes widespread, significant damage,” Feedstuffs, August 11, 2020.
29 Keith Good, “ China Could Become Largest Corn Importer, While Soybean Variables Come Into Focus,” Farm
Policy News, September 10, 2020.
30 Chicago Mercantile Exchange, “ Soybean Futures Quotes for the November 2020 contract,” CME Group, accessed on
September 15, 2020.
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U.S. Farm Income Outlook: September 2020 Forecast

Figure 4. U.S. Drought Monitor for September 8, 2020

Source: The National Drought Mitigation Center, University of Nebraska-Lincoln, at https://droughtmonitor.unl.edu/.
Why the Emphasis on Corn and Soybeans?
Often the discussion of the U.S. agricultural situation focuses on what is happening with corn and soybeans to the
exclusion of many other important crops. This is due largely to the fact that corn and soybeans are the two largest
commercial crops in the United States in terms of both value and acreage. The corn and soybean crops provide
important inputs for the domestic livestock, poultry, and biofuels sectors. In addition, the United States is
traditional y one of the world’s leading exporters of corn, soybeans, and soybean products—vegetable oil and
meal.
Since 2010, the United States has used about 34% of its annual corn supply for feed, another 34% for biofuels, 12%
for exports, and 9% for food processing, while 11% on average are retained as stocks. Similarly, since 2010, 49% of
U.S. soybean supplies have been used domestical y—“crushed” into soybean meal and oil, while 43% has been
exported, and 8% has gone into stocks. As a result, the outlook for these two crops is critical to both farm sector
profitability and regional economic activity across large swaths of the United States, as wel as in international
markets.
U.S. Livestock Developments and Outlook for 2020
Because the livestock sectors (particularly dairy and cattle, but hogs and poultry to a lesser
degree) have longer biological lags and often require large capital investments up front, they are
slower to adjust to changing market conditions than is the crops sector. Furthermore, once an
animal or poultry is market-ready—that is, once it has attained the optimal weight gain and is
ready to be sold—the producer wil need to sel it to capture the maximum benefit of the weight
gain and to avoid further costs associated with holding the animal or poultry for any additional
period. In contrast, grain or oilseed producers can simply continue to store their commodities if
market conditions change unexpectedly. As a result, the demand shocks related to COVID-19
impacted the livestock sector more severely than the crops sector.
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COVID-19 Impacts the U.S. Livestock Sector
Starting in mid-April, a surge in infections among workers in meat packing plants and other food
processing plants led to multiple plant closures and contributed to unexpected surpluses of ready-
for-market hogs, cattle, and poultry at the farm level.31 Producers were forced to either euthanize
their animals or continue to feed them at a loss.
Meat processing plant closures have two opposing market effects: on the one hand, demand for
livestock in the surrounding region is reduced, and this tends to depress cash and futures prices,
lowering prices that producers receive and that packers pay for market-ready livestock; on the
other hand, the supply of consumer-ready products is reduced, which tends to raise wholesale and
retail prices for the affected products. As evidence of this, USDA reported a widening gap
between farm and wholesale prices for beef in the spring.32
Most of the affected meat processing plants have been brought back on line but are operating
under new safety guidelines and often with fewer workers on site at any given time. In many
cases, these changes have slowed the operating line speed and the amount of throughput. An
examination of the farm, wholesale, and retail price data for beef and pork suggests that the price
spread between farm and retail prices peaked in May and June and has subsided somewhat in July
but stil remains at historical y high levels.33
Beef and Egg Production Decline and Pork, Poultry, and Milk Expand in 2020
Growth in beef (-0.4%) and egg (-2.1%) production are expected to turn negative in 2020, while
pork (+2.2%), poultry (+1.1%), and milk (+1.6%) production are projected up.34 This is in
contrast with 2019 when al five protein categories experienced robust year-over-year growth—
beef (+1.1%), pork (+5.0%), poultry (+2.5%), eggs (+2.6%), and milk (+0.4%). USDA projects
protein production under al five categories to return to positive growth in 2021.
Prior to COVID-19, nearly 54% of U.S. food consumption occurred outside of the home,
including much of the consumption of meat products. A key uncertainty for the meat-producing
sector is whether demand for meat products (in both the domestic and export markets) wil return
to pre-COVID-19 levels or whether a new equilibrium wil be established that absorbs the growth
in output projected for 2021. This balance between demand and supply wil determine the
direction of livestock, poultry, egg, and milk prices.
Livestock-Price-to-Feed-Cost Ratios Signal Lower Profitability Outlook
The changing conditions for the U.S. livestock sector may be tracked by the evolution of the
ratios of livestock output prices to feed costs (Figure 5). A higher ratio suggests greater
profitability for producers.35 The cattle-, hog-, and broiler-to-feed ratios have al exhibited

31 CRS Insight IN11366, COVID-19 Disrupts U.S. Meat Supply; Producer Prices Tumble.
32 William Hahn, “Record increase in March farm-to-wholesale beef price spread driven by sharp wholesale price
changes in mid-March 2020,” Chart of the Day, USDA, ERS, April 23, 2020. See also “ Cash Prices, Meat Cutout
Diverge,” ProFarmer, April 25, 2020.
33 Michael Nepveux, “Pandemic Results in Record Farm-to-Retail Price Spreads in Beef and Pork,” American Farm
Bureau Federation (AFBF), Market Intel, September 4, 2020.
34 WAOB, USDA, WASDE, T able—U.S. Meat Supply and Use; and T able—U.S. Egg Supply and Use, pp. 32-33,
September 11, 2020.
35 T he ratio is calculated as the farm price for milk, cattle (steers and heifers), hogs, and broilers compared with their
major feed source: Cattle and hog feed cost is 100% corn; broilers feed cost is 58% corn and 42% soybeans; dairy feed
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significant volatility during the 2017-2020 period but in general have trended downward during
2018 through 2020, suggesting eroding profitability.36
The milk-to-feed price ratio trended upward from mid-2018 into late 2019 before collapsing in
early 2020. However, as the prospects for large corn and soybean crops in 2020 pushed feed
prices lower, the profitability of milk production improved, and the milk-to-feed ratio rose into
mid-2020. This trend may again reverse itself as USDA has recently raised its outlook for grain
and oilseed prices in 2020, while continuing to forecast lower milk prices in 2020 and 2021.37
These results vary widely across the United States. Many marginal y profitable cattle, hog,
broiler, and milk producers face continued financial difficulties.
Figure 5. Livestock Farm-Price-to-Feed Ratios, Indexed
(ratio of national average farm price per 100 lbs. of meat to per-unit feed cost; indexed, 2017 = 100.)

Source: National Agricultural Statistics Service (NASS), Agricultural Prices, August 30, 2020. Calculations by CRS.
Notes: The livestock feed price ratio is calculated as the farm price for milk, cattle (steers and heifers), hogs,
and broilers to their major feed source: cattle and hog feed cost is 100% corn; broilers feed cost is 58% corn and
42% soybeans; and dairy feed cost is a mix of corn, soybean meal, and alfalfa hay.
Gross Cash Income Highlights
Projected farm sector revenue sources in 2020 include crop revenues (46% of sector revenues),
livestock receipts (38%), government payments (9%), and other farm-related income (8%),
including crop insurance indemnities, machine hire, and custom work (Figure 6). Total farm
sector gross cash income for 2020 is projected up slightly (+0.2%) to $428.8 bil ion, as large

cost is a mix of corn, soybean meal, and alfalfa hay. Feed costs—at 30%-80% of variable costs—are generally the
largest cost component in livestock operations.
36 Broilers are chickens raised for meat. Layers are chickens retained for egg production.
37 WAOB, WASDE, U.S. Dairy Prices, September 11, 2020, p. 34.
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declines in cash receipts from livestock activities (down $14.3 bil ion or -3.3%) are offset by
record government payments (up $14.7 bil ion or +65.7%).
Figure 6. Farm Gross Cash Receipts by Source, 2010-2020F

Source: ERS, “2020 Farm Income Forecast,” September 2, 2020. Al values are nominal—that is, not adjusted
for inflation. Values for 2020 are forecasts. Gross farm income percentage shares (right-hand side) are for 2020;
totals may not add to 100 due to rounding.
Notes: Farm-related income includes income from custom work, machine hire, agritourism, forest product
sales, crop insurance indemnities, and cooperative patronage dividend fees.
Crop Receipts
Total crop sales peaked in 2012 at $231.6 bil ion when a nationwide drought pushed commodity
prices to record or near-record levels. In 2020, crop sales are projected at $196.6 bil ion, up 1.0%
from 2019 (Figure 7). Projections for 2020 and percentage changes from 2019 include the
following:
 feed crops—corn, barley, oats, sorghum, and hay: $57.0 bil ion (-4.5%);
 oil crops—soybeans, peanuts, and other oilseeds: $36.1 bil ion (-0.6%);
 fruits and nuts: $33.6 bil ion (+17.0%);
 vegetables and melons: $19.4 bil ion (+2.3%);
 food grains—wheat and rice: $11.0 bil ion (-6.7%);
 cotton: $6.6 bil ion (-7.3%); and
 other, including tobacco, sugar, greenhouse, and nursery: $32.9 bil ion (+2.6%).
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Figure 7. Crop Cash Receipts by Source, 2010-2020F

Source: ERS, “2020 Farm Income Forecast,” September 2, 2020. Al values are nominal—not adjusted for
inflation. Values for 2020 are forecasts. Percentage shares of crop receipts (right-hand side) are for 2020.
Livestock Receipts
The livestock sector includes cattle, hogs, sheep, poultry and eggs, dairy, and other minor
activities. Cash receipts for the livestock sector grew steadily from 2010 to 2014, when it peaked
at a record $212.3 bil ion. However, the sector turned downward in 2015 (-10.7%) and again in
2016 (-14.1%), driven largely by projected year-over-year price declines across major livestock
categories (Table A-4 and Figure 8).
In 2017, livestock sector cash receipts recovered with year-to-year growth of 7.9% to $175.6
bil ion. Cash receipts increased slightly in 2018 (+0.4%) before declining in 2019 (-0.2%). In
2020, cash receipts are projected down sharply (-8.1%) for the sector at $161.7 bil ion (lowest
value since 2010) due to declines in the four major categories: cattle, hogs, dairy, and poultry and
eggs. Projections for 2020 (and percentage changes from 2019) include
 cattle and calf sales: $61.2 bil ion (-7.7%),
 dairy sales: $39.6 bil ion (-2.2%),
 poultry and egg sales: $35.5 bil ion (-12.1%),
 hog sales: $18.5 bil ion (-15.9%), and
 miscel aneous livestock:38 $6.9 bil ion (+0.7%).

38 Miscellaneous livestock includes aquaculture, sheep and lambs, honey, mohair, wool, pelts, and other animal
products.
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Figure 8. U.S. Livestock Product Cash Receipts by Source, 2010-2020F

Source: ERS, “2020 Farm Income Forecast,” September 2, 2020. Al values are nominal—that is, not adjusted
for inflation. Values for 2020 are forecasts. Percentage shares of livestock receipts (right-hand side) are for 2020.
Government Payments to the U.S. Farm Sector
Government direct payments to U.S. farmers—projected at a record $37.2 bil ion in 2020—are
expected to represent 36.2% of projected net farm income of $102.7 bil ion (Figure 9). The
government share of net farm income reached a peak of 65.2% in 1984 during the height of the
farm crisis of the 1980s. The importance of government payments as a percentage of net farm
income varies national y by crop and livestock sector and by region.
As shown earlier (Figure 6), federal farm subsidies of $37.2 bil ion would represent an 8.7%
share of projected gross cash income of $428.7 bil ion in 2020.
Historical y, direct government farm program payments have included39
 direct payments (decoupled payments based on historical planted acres);40
 price-contingent payments (both coupled and decoupled program outlays linked
to market conditions);
 conservation payments (including the Conservation Reserve Program and other
environmental-based outlays);

39 Government farm payments do not include premium subsidies or indemnities paid under the feder al crop insurance
program—indemnity payments are included as “ farm-related income.” Also, government payments do not include
USDA loans, which are listed as a liability in the farm sector’s balance sheet.
40 Decoupled means that payments are not linked to current producer behavior and, instead, are based on some other
measure outside of the producer’s decisionmaking sphere, such as historical acres planted to program crops.
Decoupling of payments is intended to minimize their incentives on producer behavior.
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 ad hoc and emergency disaster assistance payments (including emergency
supplemental crop and livestock disaster payments); and
 other miscel aneous outlays, including payments under ad hoc programs initiated
by the Administration, outside of traditional farm-bil authorities, such as Market
Loss Assistance (MLA) payments for relief of low commodity prices, the Market
Facilitation Program (MFP) payments to offset retaliatory tariff damages, and the
Cotton Ginning Cost-Share program—but also legislatively authorized programs,
such as the biomass crop assistance program, peanut quota buyout, milk income
loss, tobacco transition, and other miscel aneous programs.
Figure 9. Net Farm Income by Source, 1996-2020F

Source: Compiled by CRS from ERS, “2020 Farm Income Forecast,” September 2, 2020. Sources of net farm
income, expressed as percentage shares (right-hand side), are for 2020. Values for 2020 are forecasts.
USDA Direct Payments in 2019
In 2019, $22.4 bil ion in federal payments were made to producers. This was the largest taxpayer
transfer to the agriculture sector (in nominal dollars) since 2005 (Figure 10). The surge in federal
subsidies in 2019 was driven by large “trade-damage” payments made under the MFP initiated by
USDA in response to the U.S.-China trade dispute.41 MFP payments (reported to total $14.5
bil ion) include outlays from the 2018 MFP program that were not received by producers until
2019, as wel as payments under the first and second tranches of the 2019 MFP program, some of
which are expected to be paid in 2020.

41 USDA has initiated two trade aid packages with up to $28 billion of financial support designed to partially offset the
negative price and income effects of lost commodity sales to major markets. T he 2018 trade aid package was valued at
up to $12 billion (see CRS Report R45310, Farm Policy: USDA’s 2018 Trade Aid Package), while the 2019 trade aid
package was valued at up to $16 billion (see CRS Report R45865, Farm Policy: USDA’s 2019 Trade Aid Package).
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In 2020, MFP payments are projected to decline to $3.8 bil ion, representing the third and final
tranche of payments from the 2019 MFP program. On September 9, 2020, USDA announced a
new MFP-like program—referred to as the Seafood Trade Relief Program (STRP)—valued at
$530 mil ion, which targets U.S. seafood products that had been affected by retaliatory tariffs.42
However, seafood is not included as part of ERS farm income forecasts. In addition, no further
MFP payments have been announced for 2020 by the Administration.
USDA Direct Payments in 2020
Projected government payments of $37.2 bil ion in 2020, if realized, would represent a 65.7%
increase from 2019 and would be the largest annual federal subsidy outlay to the agricultural
sector on record in both nominal and inflation-adjusted dollars. The surge in federal subsidies in
2020 is driven by large ad hoc payments made under three Administration-initiated programs:
 The 2019 Market Facilitation Program (MFP): most of the 2019 MFP
payments occurred in 2019 ($10.7 bil ion), but the final $3.8 bil ion in MFP
payments are expected to be made in 2020.
 The 2020 Coronavirus Food Assistance Programs (CFAP1 and CFAP2):
USDA has al ocated $16 bil ion in funding for CFAP1 to address COVID-19-
related damages that occurred during the first half of 2020. As of September 20,
2020, $10.1 bil ion of CFAP1 funding has been dispersed. USDA has al ocated
additional funding of up to $14 bil ion under CFAP2, also to address COVID-19-
related damages to the U.S. agricultural sector.
 The 2020 Paycheck Protection Program (PPP): USDA expects that $5.8 bil ion
of $7.3 bil ion of PPP loans to agriculture-related enterprises wil be forgiven and
counted as farm income in 2020.43
USDA permanent disaster assistance44 is projected higher year-over-year in 2020 at $2.5 bil ion
(+14.2%). Most of the $2.5 bil ion comes from a new, temporary program, the Wildfire and
Hurricane Indemnity Program Plus, enacted through the Disaster Relief Act of 2019 (P.L. 116-
20). Payments under the Price Loss Coverage program are projected at $3.9 bil ion in 2020, up
from $1.9 bil ion in 2019. In contrast, Agricultural Risk Coverage outlays are projected to decline
to $39 mil ion, down from $641 mil ion in 2019 (see “Price Contingent” in Figure 10).45
Conservation programs include al conservation programs operated by USDA’s Farm Service
Agency and the Natural Resources Conservation Service that provide direct payments to
producers. Conservation payments are forecast at $4.0 bil ion for 2020, up 5.0% from $3.8 bil ion
in 2019, and are expected to account for 11% of federal farm support in 2020.

42 USDA, “ USDA Supports U.S. Seafood Industry Impacted by Retaliatory T ariffs,” news release, September 9, 2020,
at https://www.farmers.gov/Seafood.
43 For information on the PPP loan forgiveness, see CRS Report R46397, SBA Paycheck Protection Program (PPP)
Loan Forgiveness: In Brief.
44 Fiscal year payments generally involve outlay commitments incurred during the previous crop year. For example,
FY2019 disaster assistance payments are primarily related to disasters for crops that were grown and harvested in 2018.
See CRS Report RS21212, Agricultural Disaster Assistance, for information on available farm disaster programs.
45 For details, see CRS Report R43448, Farm Commodity Provisions in the 2014 Farm Bill (P.L. 113 -79).
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Figure 10. U.S. Government Farm Support, Direct Outlays, 1996-2020F

Source: ERS, “2020 Farm Income Forecast,” September 2, 2020. Al values are nominal (not adjusted for
inflation). Values for 2020 values are forecasts. Government payments as percentage shares (right-hand side) are
for 2020.
Notes: Data are on a calendar-year basis and reflect the timing of the actual payment. “Direct Payments”
include production flexibility contract (PFC) payments enacted under the 1996 farm bil and fixed direct
payments (DP) of the 2002 and 2008 farm bil s. “Price-Contingent” outlays include loan deficiency payments,
marketing loan gains, counter-cyclical payments, Average Crop Revenue Election, Price Loss Coverage,
Agricultural Risk Coverage, and the dairy Margin Protection program (MPP), and Dairy Margin Coverage (DMC)
payments. “Conservation” outlays include Conservation Reserve Program (CRP) payments along with other
conservation program outlays. “Ad Hoc and Permanent Disaster” is divided into payments under the Market
Facilitation Program (MFP), Paycheck Protection Program (PPP), Coronavirus Food Assistance Program (CFAP),
Market Loss Assistance (MLA), and “Disaster Assistance” programs, each of which is identified with a different
blue pattern. “Disaster Assistance” is an aggregate category that includes supplemental crop and livestock
disaster payments and other emergency payments to the agriculture sector, such as payment made under the
Wildfire, Hurricane Indemnity Program (WHIP). “Miscel aneous” outlays include payments under the cotton
ginning cost-share, biomass crop assistance, peanut quota buyout, milk income loss contract, tobacco transition,
and other miscel aneous payment programs.
Dairy Margin Coverage Program Outlook
The 2018 farm bil (P.L. 115-334) made several changes to the previous Margin Protection
Program (MPP) for dairy, including a new name—the Dairy Margin Coverage (DMC) program—
and expanded margin coverage choices from the original range of $4.00-$8.00 per hundredweight
(cwt.).46 Under the 2018 farm bil , as a cushion against low milk prices, producers have the option
of buying coverage to insure a margin between the national farm price of milk and the cost of
feed up to a threshold of $9.50/cwt. on the first 5 mil ion pounds of milk coverage.

46 T he margin equals the All Milk price minus a composite feed price based on the formula used by the Dairy Margin
Coverage (DMC) of the 2018 farm bill starting January 2019 and, for all prior months, the Margin Protection Program
(MPP) of the 2014 farm bill (P.L. 113-79). See CRS Report R45525, The 2018 Farm Bill (P.L. 115-334): Summ ary
and Side-by-Side Com parison, and CRS In Focus IF10195, U.S. Dairy Program s After the 2014 Farm Bill (P.L. 113 -
79).
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Figure 11. The Dairy Output-to-Input Margin
(dairy margin equals the national average farm price of milk less average feed costs per 100 pounds of
milk)

Source: NASS, Agricultural Prices, August 30, 2020. Calculations by CRS. Al values are nominal.
Note: The margin equals the Al Milk price minus a composite feed price based on the formula used by the
DMC of the 2018 farm bil starting January 2019 and, for al prior months, the MPP of the 2014 farm bil ( P.L.
113-79). See CRS Report R45525, The 2018 Farm Bil (P.L. 115-334): Summary and Side-by-Side Comparison.
The DMC margin differs from the USDA-reported milk-to-feed ratio (shown in Figure 5) but
reflects the same market forces. In 2019, the formula-based milk-to-feed margin used to
determine government DMC payments started the year near $8.00/cwt. but rose to over
$12.00/cwt. by year’s end, thus exceeding the newly instituted $9.50/cwt. payment threshold
(Figure 11). In 2020, the DMC margin plummeted to below $6.00/cwt. in May before jumping to
$12.30/cwt. in July. The volatility is a function of market uncertainty over feed prices, as
described earlier in this report. USDA projects that the DMC program wil make $219 mil ion in
payments in 2020, down from $295 mil ion in 2019.
Production Expenses
Total production expenses for 2020 for the U.S. agricultural sector are projected at $344.2 bil ion
in nominal dollars, down $4.6 bil ion (-1.3%) from 2019 (Figure 12). Production expenses
peaked in both nominal and inflation-adjusted dollars in 2014, then trended lower through 2019
in inflation-adjusted dollars and are projected lower again in 2020.
Production expenses affect crop and livestock farms differently. The principal expenses for
livestock farms are feed costs, purchases of feeder animals and poultry, and hired labor. In
contrast, fuel, seed, pesticides, interest, and fertilizer costs are major crop production expenses.
USDA projects that 6 of the 10 major expense categories wil rise in 2020—including feed, labor,
fertilizer, seed, net rent, and taxes (Figure 13). Expenses for livestock and poultry purchases,
pesticides, interest, and fuel are expected to decline in 2020.
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Figure 12. Total Annual Farm Production Expenses, 1970-2020F

Sources: ERS, “2020 Farm Income Forecast,” September 2, 2020. Nominal values are not adjusted for inflation.
Inflation-adjusted expenses are calculated using the chain-type GDP deflator set to 2019 = 100. U.S. Department
of Commerce, Bureau of Economic Analysis (BEA), data accessed December 3, 2019. Values for 2020 are
forecasts.
Figure 13. Farm Production Expenses for Selected Items, 2019 and 2020F

Source: ERS, “2020 Farm Income Forecast,” September 2, 2020. Values are nominal. Values for 2020 are
forecast.
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How have production expenses moved relative to revenues? A comparison of the indexes of
prices paid (an indicator of expenses) versus prices received (an indicator of revenues) reveals
that, since 2014, the prices received index has general y declined, whereas the prices paid index
has held steady, suggesting that farm sector profit margins have been decreased over the past six
years (Figure 14).
Figure 14. Index of Monthly Prices Received vs. Prices Paid, 2005-2020

Source: NASS, Agricultural Prices, August 30, 2020. Calculations by CRS.
Note: Monthly indexes are adjusted to 2011 = 100 to permit relative comparisons.
Farm Asset Values and Debt
A measure of the farm sector’s financial wel -being is net worth as measured by farm assets
minus farm debt. A summary statistic that captures this relationship is the debt-to-asset ratio.
The U.S. farm income and asset-value situation and outlook suggest a potential continuation of
the slowly eroding financial situation for the agriculture sector as a whole that has been ongoing
since 2012. Uncertainty clouds the economic outlook for the sector, reflecting the mixed outlook
for prices and market conditions, an increasing dependency on international markets to absorb
domestic surpluses, and an increasing dependency on federal support to offset lost trade
opportunities due to ongoing trade disputes.
 Farm asset values (see box “Measuring Farm Wealth: The Debt-to-Asset
Ratio”)—which reflect farm investors’ and lenders’ expectations about long-term
profitability of farm sector investments—are projected to be up 1.1% in 2020 to a
nominal $3.1 tril ion (Table A-3). The projected rise in asset value is due to
increases in both real estate values (+1.2%) and non-real-estate values (+0.8%).
Real estate is projected to account for 83% of total farm sector asset value.
 Inflation-adjusted farm asset values (using 2019 dollars) are projected lower in
2020 (-0.8%). In inflation-adjusted terms, farm asset values peaked in 2014
(Figure 15).
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 Crop land values are closely linked to commodity prices. The leveling off of crop
land values since 2015 reflects stagnant commodity prices (Figure 16).
Figure 15. Real Estate Share of Total Farm Sector Assets

Sources: ERS, “2020 Farm Income Forecast,” September 2, 2020. Al values are adjusted for inflation using the
chain-type GDP deflator such that 2019 = 100; BEA, accessed December 3, 2019. Values for 2019 and 2020 are
forecasts. Percentage shares of total farm sector assets (right-hand side) are for 2020.
Note: Al other assets include financial assets, inventories of agricultural products, and the value of machinery
and motor vehicles.
Figure 16. U.S. Average Farm Land Values, 1985-2020

Source: NASS, Land Values 2020 Summary, August 2020.
Notes: Farm real estate value measures the value of al land and buildings on farms. Separate cropland and
pasture values are available only since 1998. Al values are nominal.
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Measuring Farm Wealth: The Debt-to-Asset Ratio
Farm assets include both physical and financial farm assets. Physical assets include land, buildings, farm
equipment, on-farm inventories of crops and livestock, and other miscel aneous farm assets. Financial assets
include cash, bank accounts, and investments such as stocks and bonds.
Farm debt includes both business and consumer debt linked to real estate and non-real-estate assets (e.g.,
financial assets, inventories of agricultural products, and the value of machinery and motor vehicles) of the farm
sector.
The debt-to-asset ratio compares the farm sector’s outstanding debt related to farm operations relative to the
value of the sector’s aggregate assets. Change in the debt-to-asset ratio is a critical barometer of the farm sector’s
financial performance, with lower ratios indicating greater financial resiliency. A lower debt-to-asset ratio suggests
that the sector is better able to withstand short-term increases in debt related to interest rate fluctuations or
changes in the revenue stream related to lower output prices, higher input prices, or production shortfalls. The
largest single component in a typical farmer’s investment portfolio is farmland. As a result, real estate values affect
the financial wel -being of agricultural producers and serve as the principal source of col ateral for farm loans.
 Total farm debt is forecast to rise to a record $433.8 bil ion in 2020 (+3.6%)
(Table A-3).
 Farm equity—or net worth, defined as asset value minus debt—is projected to be
up slightly (+0.7%), at $2.7 tril ion in 2020 (Table A-3).
 The farm debt-to-asset ratio is forecast up in 2020 at 14.0%, the highest level
since 2003 but stil relatively low by historical standards (Figure 17). If realized,
this would be the eighth consecutive year of increase in the debt-to-asset ratio.
Figure 17. U.S. Farm Debt-to-Asset Ratio, 1960-2020F

Source: ERS, “2020 Farm Income Forecast,” September 2, 2020. Values for 2020 are forecasts.
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Average Farm Household Income
A farm can have both an on-farm and an off-farm component to its income statement and balance
sheet of assets and debt.47 Thus, the wel -being of farm operator households is not equivalent to
the financial performance of the farm sector or of farm businesses because of the inclusion of
nonfarm investments, jobs, and other links to the nonfarm economy.
 Average farm household income (sum of on- and off-farm income) is projected at
$134,125 in 2020 (Table A-2), up 8.5% from 2019 and almost equal to the record
of $134,165 in 2014.
 About 22% ($20,926) of total farm household income in 2020 is projected to be
from farm production activities (including government payments), while the
overwhelming majority, at 78% ($104,238), is earned off the farm (including
financial investments).
 The share of farm income derived from off-farm sources had increased steadily
for decades and peaked at about 95% in 2000 (Figure 18).
Figure 18. U.S. Average Farm Household Income, by Source, 1960-2020F

Sources: ERS, “2020 Farm Income Forecast,” September 2, 2020. Al values are adjusted for inflation using the
chain-type GDP deflator, 2019 = 100; BEA, data accessed December 3, 2019. Values for 2020 are forecasts.
Percentage shares of average farm household income (right-hand side) are for 2020.
Total vs. Farm Household Average Income
Since the late 1990s, farm household incomes have surged ahead of average U.S. household
incomes (Figure 19). In 2018 (the last year for which comparable data were available), the

47 ERS, “Farm Household Well-Being,” at http://www.ers.usda.gov/topics/farm-economy/farm-household-well-
being.aspx.
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average farm household income of $112,211 was about 25% higher than the average U.S.
household income of $90,021 (Table A-2).
Figure 19. Average Farm Household Income Compared with U.S. Average
Household Income

Sources: ERS, “2020 Farm Income Forecast,” September 2, 2020. Al values are adjusted for inflation using the
chain-type GDP deflator, 2019 = 100; BEA, data accessed December 3, 2019. Values for 2020 are forecasts.
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Appendix. Supporting Material on Farm Income
Measuring Farm Profitability
Two different indicators measure farm profitability: net cash income and net farm income.
Net cash income compares cash receipts to cash expenses. As such, it is a cash flow measure representing the
funds that are available to farm operators to meet family living expenses and make debt payments. For example,
crops that are produced and harvested but kept in on-farm storage are not counted in net cash income. Farm
output must be sold before it is counted as part of the household’s cash flow.
Net farm income is a more comprehensive measure of farm profitability. It measures value of production,
indicating the farm operator’s share of the net value added to the national economy within a calendar year
independent of whether it is received in cash or noncash form. As a result, net farm income includes the value of
home consumption, changes in inventories, capital replacement, and implicit rent and expenses related to the farm
operator’s dwel ing that are not reflected in cash transactions. Thus, once a crop is grown and harvested, it is
included in the farm’s net income calculation, even if it remains in on-farm storage.
Key Concepts Behind Farm Income
 Net cash income is general y less variable than net farm income. Farmers can manage the timing of crop and
livestock sales and purchase of inputs to stabilize the variability in their net cash income. For example, farmers
can hold crops from large harvests in on-farm storage to sel in the forthcoming year when output may be
lower and prices higher.
 Off-farm income and crop insurance subsidies, both of which have increased in importance in recent years, are
not included in the calculation of aggregate farm income. Crop insurance indemnity payments are included.
 Off-farm income is included in the discussion of farm income at the household level at the end of this report.
National vs. State-Level Farm Household Data
Aggregate data often obscure or understate the diversity and regional variation that occurs across America’s
agricultural landscape. For insights into the differences in American agriculture, visit the Economic Research
Service’s (ERS’s) websites on “Farm Structure and Organization” and “Farm Household Wel -Being.”48
ERS’s Annual Farm Income Forecasts
ERS releases three farm income forecasts each calendar year. The first forecast is general y released in February as
part of the President’s budget process and coincides with USDA’s annual outlook forum, which convenes toward
the end of every February. The initial forecast consists primarily of trend projections for the year because it
precedes most agricultural activity, which occurs later in the spring and summer. The initial projections rely heavily
on assumptions of trend yields and USDA’s baseline forecasts for market conditions.
ERS’s second farm income forecast is general y released in late August or early September as part of what USDA
refers to as the mid-session budget review. By late August, most planting of major program crops is finished, and
crop growing conditions are better known, thus contributing to improved yield estimates. Domestic and
international market conditions and trade patterns have also been established, thus improving forecasts for most
commodity prices and potential farm revenue support outlays. It is not unusual for large variations in farm income
projections to occur between the first and second farm income forecasts.
ERS’s third farm income forecast is general y released in late November (in 2020, it is to be released on
November 27) and represents a tightening up of the data: preliminary forecasts of planted acres and yields are
gradual y replaced with estimates based on actual field surveys and crop reporting by farmers to USDA. In most
years, only smal variations in farm income estimates occur between the second and third forecasts. The farm
income forecast cycle then begins anew in the succeeding year. However, changes to estimates from previous
years continue to occur for several years as more complete data become available.
This report discusses aggregate national net farm income projections for calendar year 20 20, as reported by ERS
on September 2, 2020.49 It is the second of three USDA farm income forecasts for 2020.

48 Economic Research Service (ERS), “Farm Structure and Organization,” at http://www.ers.usda.gov/topics/farm-
economy/farm-structure-and-organization.aspx; and ERS, “ Farm Household Well-Being,” at http://www.ers.usda.gov/
topics/farm-economy/farm-household-well-being.aspx.
49 For both national and state-level farm income, see ERS, “U.S. and State Farm Income and Wealth Statistics,” at
http://www.ers.usda.gov/data-products/farm-income-and-wealth-statistics.aspx.
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USDA Farm Prices Received Indexes for Selected Commodities
Figure A-1 to Figure A-4 present USDA data on monthly farm prices received for several major
farm commodities—corn, soybeans, wheat, upland cotton, rice, milk, cattle, hogs, and chickens.
The data are presented in an indexed format where monthly price data for year 2010 = 100 to
facilitate comparisons.
USDA Farm Income Data Tables
Table A-1 to Table A-3 present aggregate farm income variables that summarize the financial
situation of U.S. agriculture. In addition, Table A-4 presents the annual average farm price
received for several major commodities, including the USDA forecast for the 2020-2021
marketing year for major program crops and 2021 for livestock products.
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U.S. Farm Income Outlook: September 2020 Forecast

Figure A-1. Monthly Farm Prices for Corn, Soybeans, and Wheat, Indexed Dollars

Source: National Agricultural Statistics Service (NASS), Agricultural Prices, August 30, 2020. Calculations by CRS.
Notes: Monthly farm prices for the 2010-2020 period have been divided by the annual average price for 2010
and multiplied by 100 such that 2010 = 100. Such price indexing facilitates relative comparisons.
Figure A-2. Monthly Farm Prices for Cotton and Rice, Indexed Dollars

Source: NASS, Agricultural Prices, August 30, 2020. Calculations by CRS.
Notes: Monthly farm prices for the 2010-2020 period have been divided by the annual average price for 2010
and multiplied by 100 such that 2010 = 100. Such price indexing facilitates relative comparisons.
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U.S. Farm Income Outlook: September 2020 Forecast

Figure A-3. Monthly Farm Prices for All-Milk and Cattle (500+ lbs.), Indexed Dollars

Source: NASS, Agricultural Prices August 30, 2020. Calculations by CRS.
Notes: Monthly farm prices for the 2010-2020 period have been divided by the annual average price for 2010
and multiplied by 100 such that 2010 = 100. Such price indexing facilitates relative comparisons.
Figure A-4. Monthly Farm Prices for All Hogs and Broilers, Indexed Dollars

Source: NASS, Agricultural Prices, August 30, 2020. Calculations by CRS.
Notes: Monthly farm prices for the 2010-2020 period have been divided by the annual average price for 2010
and multiplied by 100 such that 2010 = 100. Such price indexing facilitates relative comparisons.
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Table A-1. Annual U.S. Farm Income ($ billions) Since 2015, Including 2020 Forecasts

2020 Forecasts
2019 to 2020
Item
2015
2016
2017
2018
2019
2-5-20
9-02-20
Nov. 20
Change (%)a
1. Cash receipts
377.4
358.5
370.4
371.4
370.6
384.4
358.3
—
-3.3%
Cropsb
187.9
195.8
194.9
195.1
194.6
198.6
196.6
—
1.0%
Livestock
189.5
162.7
175.6
176.3
176.0
185.8
161.7
—
-8.1%
2. Government paymentsc
10.8
13.0
11.5
13.7
22.4
15.0
37.2
—
65.7%
CCP-PLC-ARCd
5.3
8.2
7.0
3.2
2.7
3.9
4.8
—
81.5%
Marketing loan benefitse
0.2
0.2
0.0
0.0
0.0
0.5
0.9
—
NA
Conservation
3.6
3.8
3.8
4.0
3.8
4.2
4.0
—
5.0%
Ad hoc and emergencyf
1.8
0.7
0.7
0.9
1.4
2.5
1.6
—
12.7%
Al otherg
0.0
0.4
0.0
5.6
14.5
4.3
25.8
—
77.9%
3. Farm-related incomeh
34.4
27.9
31.2
29.1
34.7
31.5
33.3
—
-4.2%
4. Gross cash income (1+2+3)
422.6
399.4
413.2
414.2
427.8
430.9
428.8
—
0.2%
5. Cash expensesi
315.8
303.8
311.9
311.4
317.5
321.3
313.5
—
-1.2%
6. NET CASH INCOME
106.8
95.6
101.3
102.8
110.3
109.6
115.2
—
4.5%
7. Total gross revenuesj
440.8
412.3
425.4
425.1
433.4
451.3
446.8
—
3.3%
8. Total production expensesk
359.2
350.0
350.4
343.8
348.7
354.7
344.2
—
-1.3%
9. NET FARM INCOME
81.6
62.2
75.1
81.3
83.7
96.7
102.7
—
22.7%
Source: ERS, Farm Income and Wealth Statistics, U.S. and State Farm Income and Wealth Statistics, updated as of September 2, 2020. NA = not applicable.
Notes:
a. Change represents year-to-year projected change between 2019 and the September 2, 2020, forecast for 2020.
b. Includes Commodity Credit Corporation loans under the farm commodity support program.
c. Government payments reflect payments made directly to al recipients in the farm sector, including landlords. The nonoperator landlords’ share is offset by its
inclusion in rental expenses paid to these landlords and thus is not reflected in net farm income or net cash income.
d. CCP = counter-cyclical payments. PLC = Price Loss Coverage. ARC = Agricultural Risk Coverage.
e. Includes loan deficiency payments, marketing loan gains, and commodity certificate exchange gains.
f.
Includes payments made under the Average Crop Revenue Election program, which was eliminated by the 2014 farm bil ( P.L. 113-79).
g. Market facilitation payments, cotton ginning cost-share, biomass crop assistance program, milk income loss, tobacco transition, and other miscel aneous payments.
h. Income from crop insurance indemnities, custom work, machine hire, agritourism, forest product sales, and other farm sources.
i.
Excludes depreciation and perquisites to hired labor.
j.
Gross cash income plus inventory adjustments, the value of home consumption, and the imputed rental value of operator dwel in gs.
k. Cash expense plus depreciation and perquisites to hired labor.
CRS-33

Table A-2. Average Annual Income per U.S. Household, Farm vs. All, 2013-2020 Forecasts
($ per household)

2013
2014
2015
2016
2017
2018
2019
2020
Average U.S. farm income by source

On-farm income
30,639
31,025
24,740
24,731
21,842
18,425
21,730
29,887
Off-farm income
90,481
103,140
95,140
93,187
89,747
93,786
101,848
104,238
Total farm income
121,120
134,164
119,880
117,918
111,589
112,211
123,578
134,125
Average U.S. household income
75,195
75,738
79,263
83,143
87,643
90,021
NA
NA
Farm household income as share of
U.S. avg. household income
161%
177%
151%
142%
127%
125%
NA
NA
Source: ERS, Farm Household Income and Characteristics, Principal Farm Operator Household Finances, data set updated as of September 2, 2020, at
http://www.ers.usda.gov/data-products/farm-household-income-and-characteristics.aspx.
Notes: NA = not available. Data for 2020 are USDA forecasts.
Table A-3. Average Annual Farm Sector Debt-to-Asset Ratio, 2013-2020 Forecasts
($ bil ions)

2013
2014
2015
2016
2017
2018
2019
2020
Farm assets
2,767.8
2,930.6
2,888.0
2,914.4
3,005.9
3,026.7
3,075.2
3,108.8
Farm debt
315.3
345.2
356.7
374.2
390.4
402.0
418.6
433.8
Farm equity
2,452.4
2,585.4
2,523.3
2,540.3
2,615.5
2,624.7
2,656.6
2,675.1
Debt-to-asset ratio
11.4%
11.8%
12.4%
12.8%
13.0%
13.3%
13.6%
14.0%
Source: ERS, Farm Income and Wealth Statistics; U.S. and State Farm Income and Wealth Statistics, updated as of September 2, 2020, at http://www.ers.usda.gov/data-
products/farm-income-and-wealth-statistics.aspx.
Notes: Data for 2020 are USDA forecasts.
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Table A-4. U.S. Farm Prices and Support Rates for Selected Commodities Since 2015-2016 Marketing Year
Market
2015-
2016-
2017-
2018-
2019-
2020-
% Change
2021-
% Change
Loan
Ref.
Commoditya
Unit
Year
2016
2017
2018
2019
2020
2021b
19/20-20/21
2022b
20/21-21/22
Ratec
Price
Wheat
$/bu
Jun-May
4.89
3.89
4.72
5.16
4.58
4.50
-1.7%
—
—
3.38
5.50
Corn
$/bu
Sep-Aug
3.61
3.36
3.36
3.61
3.60
3.50
-2.8%
—
—
2.20
3.70
Sorghum
$/bu
Sep-Aug
3.31
2.79
3.22
3.26
3.30
3.50
6.1%
—
—
2.20
3.95
Barley
$/bu
Jun-May
5.52
4.96
4.47
4.62
4.69
4.45
-5.1%
—
—
2.50
4.95
Oats
$/bu
Jun-May
2.12
2.06
2.59
2.66
2.82
2.70
-4.3%
—
—
2.00
2.40
Rice
$/cwt
Aug-Jul
12.10
10.40
12.90
12.60
13.20
12.60
-4.5%
—
—
7.00
14.00
Soybeans
$/bu
Sep-Aug
8.95
9.47
9.33
8.48
8.55
9.25
8.2%
—
—
6.20
8.40
Soybean Oil
¢/lb
Oct-Sep
29.86
32.48
30.0
28.26
29.50
32.00
8.5%
—
—
—
—
Soybean Meal
$/st
Oct-Sep
324.6
316.9
345.0 308.28
300.0
315.0
5.0%
—
—
—
—
Cotton, Upland
¢/lb
Aug-Jul
61.2
68.0
68.6
70.3
59.5
59.0
-0.8%
—
—
45-52
none
Livestock Products
Calendar
2015
2016
2017
2018
2019
2020
% Chg 19-20
2021
% Chg 20-21
—
—
Choice Steers
$/cwt
Jan-Dec
148.12
120.86 121.52 117.12 116.78
107.3
-8.1%
112.0
4.4%
—
—
Barrows/Gilts
$/cwt
Jan-Dec
50.23
46.16
50.48 45.93
47.95
39.4
-17.8%
44.0
11.7%
—
—
Broilers
¢/lb
Jan-Dec
90.5
84.3
93.5
97.8
88.6
70.9
-20.0%
82.0
15.7%
—
—
Eggs
¢/doz
Jan-Dec
181.8
85.7
100.9
137.6
94.0
114.9
22.2%
110.0
-4.3%
—
—
Milk
$/cwt
Jan-Dec
-4.7%
-4.2%
17.13
16.30
17.65 16.27
18.63
17.75
17.00
—
—
Source: Various USDA agency sources, as described in the notes below.
Notes: Ref. = reference, bu = bushels, cwt = 100 pounds, lb = pound, st = short ton (2,000 pounds), doz = dozen.
a. Price for grains and oilseeds are from USDA, World Agricultural Supply and Demand Estimates (WASDE), September 11, 2020. “—” = no value. USDA’s out-year
2021-2022 crop price forecasts wil first appear in the May 2021 WASDE. Soybean and livestock product prices are from USDA, Agricultural Marketing Service:
soybean oil—Decatur, IL, cash price, simple average crude; soybean meal—Decatur, IL, cash price, simple average 48% protein; choice steers—Nebraska, direct
1,100-1,300 lbs.; barrows/gilts—national base, live equivalent 51%-52% lean; broilers—wholesale, 12-city average; eggs—Grade A, New York, volume buyers; and
milk—simple average of prices received by farmers for al milk
b. Data for 2020-2021 are USDA forecasts. Data for 2021-2022 are USDA projections.
c. Loan rate and reference prices are for the 2019-2020 market year as defined under the 2018 farm bil (P.L. 115-334). The loan rate for upland cotton equals the
average market-year-average price for the two preceding crop years but within the range of 45 cents/lb. and 52 cents/lb. See CRS Report R45525, The 2018 Farm
Bil (P.L. 115-334): Summary and Side-by-Side Comparison.

CRS-35

U.S. Farm Income Outlook: September 2020 Forecast

Author Information

Randy Schnepf

Specialist in Agricultural Policy

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should n ot be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
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Congressional Research Service
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