Incomes may take hit in 2021 By Tom C. Doran
AGRINEWS PUBLICATIONS
CHAMPAIGN, Ill. — Expectations in early 2020 were for low net farm incomes, but as everyone now knows, it was a year to expect the unexpected. The pictured brightened by fall with lower than expected production, stronger than anticipated exports and additional ad hoc federal payments combined to boost revenues. University of Illinois agricultural economists Gary Schnitkey and Dale Latz looked back at 2020 incomes and ahead to the new year in a recent virtual Illinois Farm Economics Summit. The turning point for commodity prices arrived in August with hot, dry weather and a derecho storm that impacted yields in parts of Iowa, Illinois and Indiana. The U.S. Department of
Agriculture’s August forecast had the average corn yield in Iowa at 202 bushels per acre, and that was reduced to 184 by November. “Obviously, that had a big impact on yields across the United States — 181.8 was the U.S. average in the August estimate, and now we’re looking at 175.8 bushels per acre. That was due in some extent to the yield decline in Iowa, the nation’s largest corn-producing state, and Illinois and a number of other state’s yields came down, as well,” Schnitkey said. “As a result of that and continued good export demand, our 2020 average marketing year price has increased from $3.10 per bushel in August to $4 in November. “There was sort of the same phenomenon for soybeans. The August USDA projected average was 53.3 bushels per
acre, and that was reduced to 50.7 in November. The average marketing year price was projected at $8.35 per bushel in August and increased to $10.40 in November.” FEDERAL AID Along with increased prices that affected farm income in 2020, there were also farm program payments. “There was USDA’s Wildfires and Hurricane Indemnity Program Plus for 2018 and 2019 that are being paid out now. The Paycheck Protection Program that many farmers were able to take advantage of. A large percentage of those dollars will be most likely forgiven on those notes if they’re used for eligible farm expense,” Latz noted. “There was also Economic Injury Disaster Loans that some farmers took out. There were the additional Coronavi-
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rus Food Assistance Program and Market Facilitation Program payments on the 2020 crop along with finishing up for 2019. “Obviously, a lot of that added to farm incomes in 2020 and supported farm incomes from the standpoint that we thought it was going to be a tough year, and it turned out to be maybe one of the better years compared to the last three or four years anyway.” INCOME Data from farms enrolled in Illinois Farm Business Farm Management projects 2020 accrued farm income on high-productivity farms to be in the $180,000 range. “That’s based on yield, price projections, ad hoc federal payments and expenses. This is simply an estimate based on those factors. We are seeing See INCOMES, Page 21
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