Fed checks help farmers amid a dreadful year

DES MOINES, Iowa — Thanks to the government paying nearly 40% of their income, U.S. farmers are expected to end 2020 with higher profits than 2019 and the best net income in seven years, the Department of Agriculture said in its latest farm income forecast.

Farmers faced challenges throughout 2020 that included the impact of trade disputes; low prices that drove down cash receipts for corn, cotton, wheat, chicken, cattle and hogs; and weather difficulties.

Farm cash receipts are forecast to decrease nearly 1% to $366.5 billion, the lowest in more than a decade, measured in real dollars. Direct federal government payments saved farmers’ bottom lines: Farmers overall saw a 107% increase in direct payments from 2019, when a third of net income came directly from the government.

The impact of the money varies from one farm to another, depending on whether a farmer owns the land, has significant capital to draw from, has manageable debt and aggressively manages wide commodity price swings.

“The payment to one farm could be a matter of life and death of that farm and for another farm maybe just makes it not quite as bad of a year as it was going to be and everywhere in between,” said Mike Paustian, a farmer in eastern Iowa.

Excluding USDA loans and insurance indemnity payments made by the Federal Crop Insurance Corporation, farmers are expected to receive $46.5 billion from the government, the largest direct-to-farm payment ever. That includes $32.4 billion in assistance through coronavirus pandemic relief food assistance and Paycheck Protection Program payments to farmers.

Additional support comes from more traditional revenue loss programs due to low commodity prices, compensation for trade disruptions resulting from tariff battles and conservation programs assistance.

Overall, net farm income in the United States is expected to increase 43% from 2019 to $119.6 billion, the USDA estimated.

One northeast Iowa farmer said without the federal money it would have been difficult to make ends meet this year but it began to feel like the government checks were motivated by politics from a president seeking support for reelection.

“At first it did help, but then we kept getting payments and I don’t know that those were warranted,” said Rick Juchems, 65, who grows corn and soybeans and custom raises hogs. “The markets had already recovered quite a bit and they’re recovering yet more, so it helps some but it’s one of those things that the second one was more than we needed.”

In a late October campaign appearance in Omaha, Nebraska, President Donald Trump said he believed farmers were better off getting government payments than relying solely on their farming receipts.

Many top farm states voted for again for Trump in November, including Iowa, Nebraska, Texas and Kansas. Several, however, left Trump to vote for Democrat Joe Biden, including Wisconsin, Michigan and Georgia.

Bill Gordon, who with his father raises soybeans and corn in southwestern Minnesota, hopes for improved free trade agreements and a less confrontational approach under Biden in 2021.

“Volatility definitely causes volatility,” he said. “And so if we can get these free trade agreements set up, that are better, and not as confrontational but still benefit both sides, that just benefits agriculture and rural America.”