According to USDA, U.S. net cash farm income (gross cash income less cash expenses) when adjusted for inflation is forecast to decrease $13.1 billion (10.7%) to $109.6 billion in 2020. U.S. net farm income (a broader measure of farm sector profitability that incorporates non-cash items including economic depreciation and gross imputed rental income) is forecast to increase $1.4 billion (1.4%) from 2019 to $96.7 billion in 2020. If forecast changes are realized, net cash farm income in 2020 would be 0.6% below its inflation-adjusted average calculated over the 2000-18 period, while net farm income would be 5.4% above its 2000-18 average.
The trajectories of the two income measures diverge in 2020 largely because of how net sales from inventories are treated. Net cash farm income records income in the year the sale took place, while net farm income counts it in the year the production occurred. High net sales ($14.9 billion) from crop inventories forecast in 2019 are expected to boost net cash farm income significantly that year. Very low net sales from inventories ($0.5 billion) in 2020 are expected to contribute to a decrease in net cash farm income between the two years. In the net farm income series, net inventory changes are removed from cash receipts and track more closely with the value of annual agricultural production.
Find additional information and analysis on the ERS Farm Sector Income and Finances topic page, reflecting data released Feb. 5, 2020.
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