U.S. Farm Income Outlook: September 2021 Forecast

U.S. Farm Income Outlook: September 2021 Forecast

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September 29, 2021
U.S. Farm Income Outlook: September 2021 Forecast
USDA Projects Higher Farm Income in 2021
income measures only cash transactions for the year and is
Two major indicators of U.S. farm sector financial well-
a measure of current funds available for the sector. Net cash
being are net farm income and net cash farm income (see
income records a commodity’s value only after it is sold in
below for an explanation of these indicators). In its
the marketplace. Net cash income includes inventory sales
September 2021 forecast, the U.S. Department of
of stored commodities from prior years’ harvests.
Agriculture (USDA) Economic Research Service (ERS)
anticipates both indicators will be higher for 2021 than
Table 1. Farm Sector Income Measures, 2019-2021
2020 (Table 1), and 2021 will be above historic long-run
averages (Figure 1). ERS expects these increases—driven
2019
2020
2021
2020-2021
by projections of higher agricultural commodity prices and
Item
$B
$B
$B
% Change
earnings from sales in 2021 than in 2020—to more than
offset year-on-year decreases in government support and
1. Cash Receipts
424.3
437.2
486.4
11.3%
increases in farm expenses. In inflation-adjusted dollars, the
Crops
191.6
192.2
230.1
19.7%
2021 net farm income projection of $113.0 billion, if
realized, would be the highest since 2013. Congress uses
Livestock
175.4
165.0
191.5
16.0%
the ERS farm income forecast to inform deliberations
2. Government
regarding annual appropriations and farm bill programs.
22.4
45.7
28.0
-38.6%
Payments
Figure 1. Farm Sector Inflation-Adjusted Income
3. Farm-Relateda
34.7
34.3
36.8
7.4%
Measures, 1940-2021
4. Cash Expenses
317.4
326.3
351.6
7.8%
Net Cash
Income
106.9
110.9
134.7
21.5%
(1+2+3-4)
5. Gross Income
427.6
451.9
496.5
9.9%
6. Total
348.6
357.4
383.5
7.3%
Expensesb
Net Farm
79.1
94.6
113.0
19.5%
Income (5-6)
Source: CRS using USDA, ERS, “2021 Farm Income Forecast,”
September 2, 2021.
Notes: $B = bil ion. 2021F = 2021 forecast. Not adjusted for

Source: CRS using data from USDA, ERS, “2021 Farm Income
inflation.
Forecast,” September 2, 2021.
a.
Includes crop insurance indemnities, custom work, machine
hire, agritourism, forest product sales, and other farm sources.
Notes: 2021F = 2021 forecast. Adjusted for inflation using the
Bureau of Economic Analysis (BEA) chain-type GDP deflator where
b. Includes depreciation of capital assets.
2021 = 100.
Cash Receipts and Expenses Up from 2020
Net Farm Income vs. Net Cash Farm Income
ERS forecasts increased crop receipts by 19.7% and
livestock receipts by 16.0% in 2021 compared with 2020.
ERS forecasts 2021 net farm income at $113.0 billion, an
Adjusting for inflation, the 2021 crop and livestock receipt
increase of $18.5 billion (19.5%) from 2020. Net farm
income represents an accrual value of all goods and
projections, if realized, would be the highest since 2015 and
services produced on U.S. farms during the year—similar in
2016, respectively (Figure 2).
concept to gross domestic product. Crop production is
ERS forecasts 2021 farm cash expenses and total expenses
recorded as the value at harvest, regardless of whether the
production is sold or stored on farms. Net farm income also
to increase by 7.8% and 7.3%, respectively, compared with
accounts for the imputed rental value of farm dwellings and
2020. Adjusting for inflation, the 2021 projections for cash
and total expenses, if realized, would be the highest since
depreciation of farm equipment—neither of which is
2014 and 2015, respectively (Figure 3). ERS forecasts
included in net cash farm income.
increases for several expense categories, with the largest
ERS forecasts 2021 net cash farm income at $134.7 billion,
dollar increases for feed costs, livestock and poultry
an increase of $23.8 billion (21.5%) from 2020. Net cash
purchases, and fuel and oil expenses.
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U.S. Farm Income Outlook: September 2021 Forecast
Figure 2. Farm Sector Inflation-Adjusted Crop and
U.S. agricultural commodities by value. ERS forecasts
Livestock Receipts, 1996-2021
average net cash farm income for this subset to increase by
12% in 2021, with the following regions to experience the
largest year-over-year income gains: Heartland, Northern
Great Plains, and Mississippi Portal (Figure 5). ERS
forecasts coastal fruit- and vegetable-producing regions to
experience the largest year-over-year income declines.
Figure 4. Government Payments to Farmers, 1996-
2021

Source: CRS using data from USDA, ERS, “2021 Farm Income
Forecast,” September 2, 2021.
Notes: 2021F = 2021 forecast. Values are adjusted for inflation using
the BEA chain-type GDP deflator where 2021 = 100.
Figure 3. Farm Sector Inflation-Adjusted Expenses,
1996-2021

Source: CRS using data from USDA, ERS, “2021 Farm Income
Forecast,” September 2, 2021.
Notes: 2021 data represent a forecast. Values are adjusted for
inflation using the BEA chain-type GDP deflator where 2021 = 100.
Figure 5. Change in Average Net Cash Farm Income
for Farm Businesses by Resource Region
2021 forecast compared with 2020

Source: CRS using data from USDA, ERS, “2021 Farm Income
Forecast,” September 2, 2021.
Notes: 2021F = 2021 forecast. Al values are adjusted for inflation
using the BEA chain-type GDP deflator where 2021 = 100.
Lower Government Payments Projected
ERS projects 2021 total government direct payments to
farmers at $28.0 billion, a decrease of 38.6% from 2020
(Figure 4). These payments occur through a variety of
programs and authorities. Farm bill programs consisting of
commodity support, conservation, and miscellaneous

programs provided the majority of direct payments to
Source: USDA, ERS, “2021 Farm Income Forecast,” September 2,
farmers from 1996 to 2017. Disaster assistance funds
2021.
include farm bill-funded programs and ad hoc
Notes: Farm businesses are the subset of producers who specialize
appropriations. Since 2018, farmers have received other
in farming or have gross cash incomes of at least $350,000. ERS
assistance from ad hoc programs created in response to
resource regions include the continental United States only.
trade retaliation and the Coronavirus Disease 2019
(COVID-19) pandemic. ERS forecasts payments under ad
The next forecast is expected in December 2021. For
hoc programs will decline in 2021, citing improved market
information on the prior forecast, see CRS In Focus
and trade conditions. For details, see CRS Report R46676,
IF11770, U.S. Farm Income Outlook: February 2021
U.S. Farm Income Outlook: December 2020 Forecast.
Forecast.
Outlook for Farm Businesses by Region
Stephanie Rosch, Analyst in Agricultural Policy
ERS forecasts income by types of farms and geographic
regions. Farm businesses are the subset of producers who
IF11936
specialize in farming or have annual gross cash incomes of
at least $350,000; they produce approximately 79% of all
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U.S. Farm Income Outlook: September 2021 Forecast

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