Farm Income Projected at $5.75 Billion
What does 2021 hold for net farm income in Nebraska? Dr. Brad Lubben, associate professor and extension policy specialist at the University of Nebraska-Lincoln, offers an answer. Using state-level data from the USDA Economic Research Service, Lubben projects state net farm income this year will be $5.75 billion (Figure 4), a slight increase over 2020 income, $5.68 billion. If realized, net income this year would be 158 percent higher relative to 2017 when it touched a recent low of $2.2 billion. Lubben attributes the boost in income to climbing crop receipts, estimated to be $11.1 billion in 2021. Livestock receipts are projected to equal $12.1 billion, up $1 billion from last year.
Higher farm income in 2021 marks the second consecutive year net farm income would exceed $5.5 billion. However, the factors behind the higher incomes in 2020 and 2021 differ vastly. Federal government assistance reached unprecedented levels in 2020, more than $1.5 billion, due to COVID-19 assistance, other disaster assistance, and payments to mitigate losses due to trade conflicts. Government assistance accounted for 43 percent of net farm income last year, a share not seen since 2005. In contrast, government payments this year will be much less due to the winding down of ad-hoc payments and minimal commodity program payments. Government payments as share of income are expected to fall below 20 percent. As noted above, higher net farm income in 2021 will be driven largely by increased crop receipts.
Higher farm incomes will allow producers to pay down debt, restore working capital, and invest in their operations, efforts which started with last year’s higher income. Ripple effects of increased producer spending will be felt in rural communities and set the stage for greater economic growth for Nebraska’s rural economy. The latest Rural Mainstreet Index released by Ernie Goss of Creighton University captures the positive economic vibes in rural communities. This month’s index reading was a record high of 78.8.
Figure 4. Net Farm Income in Nebraska