Producers received a mixed bag of projections last week from the USDA.
By the numbers, 2021-style:
- $20.4 billion: The forecasted increase in cash receipts for commodities.
- $9.8 billion: The projected decrease in US net farm income.
Cautiously optimistic: Commodity crops should see higher cash receipts across soybeans, corn, wheat, sorghum, and even sugar beets. Livestock producers are in the same boat, with higher production and/or prices for pretty much the whole barnyard.
The catch: With prices looking up, farm economists had to be the bearer of bad news that something is likely to go down.
That something? Direct government payments.
With unprecedented aid distributed last year due to COVID-19 relief efforts, 2021 direct payments are expected to drop by more than 45%. Increased production costs aren’t helping either.
Silver lining: Jackson Takach, chief economist with Farmer Mac, notes that maintaining current grain prices could keep farm income at 2020 levels.
“There is some conservatism built into early projections…but if the current levels hold, the farm income picture in 2021 will likely be better than USDA’s February projections.”
Only time will tell.