USDA’s Economic Research Service forecasts inflation-adjusted net cash farm income (NCFI) - gross cash income minus cash expenses - to increase by $19.8 billion (17.2%) from 2020 to $134.7 billion in 2021. U.S. net farm income (NFI) is forecast to increase by $15 billion (15.3%) from 2020 to $113 billion in 2021. Net farm income is a broader measure of farm sector profitability that incorporates non-cash items, including changes in inventories, economic depreciation and gross imputed rental income.
If this forecast is realized, NFI would be 20.4% above its 2000-20 average and would be the highest since 2013. NCFI would be 18.9% above its 2000-20 average and would be the highest since 2014. Underlying these forecasts, cash receipts for farm commodities are projected to rise by $51.2 billion (13.8%) from 2020 to 2021, their highest level since 2015. Production expenses are expected to grow by $12.9 billion (3.5%) during the same period, somewhat moderating income growth. Additionally, direct government payments to farmers are expected to fall by $19.3 billion (40.8%) in 2021 compared with 2020’s record high payments. This decline is largely caused by lower anticipated payments from supplemental and ad hoc disaster assistance for Coronavirus (COVID-19) relief.
Farm sector equity is expected to increase by 2.9 percent to $2.81 trillion in nominal terms. Farm sector assets are forecast to increase 2.5 percent in 2021 to $3.25 trillion following increases in the value of farm real estate assets.
EDITOR’S TAKE:
Simply amazing, the words we would use to describe these forecasts for NFI! Increasing NFI by over 20% in a single year, especially with a 40+% drop in government payments, is almost incomprehensible. So armed with this knowledge wouldn’t it be wise to rate agricultural customers very high on your prospect list for 2021-22 and beyond? Many farmers are going to be seeking ways to reduce their tax burden by purchasing needed equipment, supplies, land and, yes, TRUCKS! The general economy may fidget and stumble because many people are fed up with higher prices and inflation, especially housing and autos, which may pull back in the months ahead. That leaves farmers with a great balance sheet and phenomenal income statement as a prime target for your sales efforts. When you add AgPack to the mix, it becomes a formidable force!
CLICK HERE to view a video on this topic!
