Don’t Let Farm Income Projections Mislead You

By Halderman

10 /29 /20

A cursory review of the latest data published by the USDA's Economic Research Service (ERS) seems positive: "Net farm income is forecast to increase by almost 23%," says Carrie Litkowski, Senior Economist and Farm Income Team Leader with ERS. The forecast indicates that net farming income is expected to total $115.2 billion, a 4.5% increase over last year's totals in nominal dollars. This is a good thing, right? Well, a closer examination of the data should give all of us a reason to pause and reconsider.

Why are the latest farm income projections misleading?

Included in this rosey projection is the federal government's infusion of $16 billion by way of the Coronavirus Food Assistance Program. These were payments directed to farmers and ranchers at the outset of the pandemic. Sonny Perdue, the U.S. Secretary of Agriculture, announced via press woman investment consultant analyzing company annual financial report balance sheet statement working with documents graphs. Stock market, office, tax, education concept. Hands with charts papersrelease in April of 2020 that the financial relief was meant to "provide critical support to our farmers and ranchers, maintain the integrity of the supply chain, and ensure that every American continues to receive and have access to the food they need."

One can argue about the effectiveness of the program and the specific aspects of how the program was implemented, but it is undeniable that there was a substantial cash infusion into the agro-sector. The important inquiry should then be, "What would farm income look like absent this federal assistance?" Further, "Is my individual farming operation positioned to remain solvent as we move into the near future?" When you take out the extra government assistance, net farm incomes are well below (-20%) the Golden Years of the early 2010s.Close up of human hands using virtual panel

Perhaps now, more so than at any time in recent memory, the uncertainty of the business environment and instability of outcomes encourages all of us to be cognizant of investment decision-making. Despite the reassuring history of governmental intervention and assistance, we cannot depend on billions of additional dollars finding its way to this sector, particularly in the vast amounts that were seen in 2020. Also, post-election, what cuts must happen to offset all the support paid out in all sectors of the US this year?

Every aspect of farming and agro-related business lends itself to analysis and scrutiny to ensure sustainable economic growth in the face of a cloudy today and hazy tomorrow. By engaging the expertise, resources and commitment of professionals you can align yourself with industry leaders who are aware of your goals and eager to assist you in finding workable, customized solutions to your farming investment objectives.

How can Halderman help?

In the extremely competitive agribusiness sector, you must take advantage of every reasonable opportunity to maximize your entity's advantages. These opportunities are best realized by engaging professional assistance with the management of your farming concern. Halderman Real Estate and Farm Management's strong knowledge base, along with your personalized vision, will allow you to achieve the ultimate goal of a robust bottom line.

For nearly a century, Halderman has been committed to meeting the needs of farms and the individuals that own and operate this hallmark of American exceptionalism. We look forward to providing the insight and advice that will allow your business to thrive, irrespective of whether or not direct federal assistance is part of the equation. Please contact us today to get started.