The Federal Reserve Bank notes in its August 2020 Beige Book that economic activity increased among most Districts, but gains were generally modest and activity remained well below levels prior to the COVID-19 pandemic.

The ongoing pandemic is set to test the resilience of farms in 2020. Statistics Canada’s estimates of 2019 farm cash receipts (FCR) suggest a relatively positive year for agriculture. FCR increased in 2019 by $3.6 billion, or 5.7%.

Despite years of persistently low commodity prices and the COVID-19 pandemic, the mood of some Ninth District agricultural bankers is surprisingly upbeat, according to a recent Federal Reserve Bank of Minneapolis survey.

On Sept. 2, USDA’s Economic Research Service (ERS) released its updated Farm Sector Income and Finances report and projected that farm profits would improve in 2020 relative to 2019. According to the ag agency, the improving bottom line for farmers will result from slightly higher crop receipts, lower production expenses and a hefty increase in government assistance.

Inflation-adjusted U.S. net cash farm income (NCFI), defined as gross cash income less cash expenses, is forecast to increase $4 billion (3.6%) to $115.2 billion in 2020.

Farmer sentiment improved markedly in August as the Purdue University-CME Group Ag Economy Barometer rose to a reading of 144, 26 points higher than a month earlier. The improvement in producer sentiment was the result of improved perceptions regarding current conditions and, especially, better expectations for the future. The Index of Current Conditions rose 13 points in August to a reading of 124 while the Index of Future Expectations rose 33 points to a reading of 154.