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FAPRI: Lower Government Payments and High Input Costs Impact Income

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This year’s farm income will likely be down from what was seen in 2020. However, the Food and Agricultural Policy Research Institute at the University of Missouri expects this year’s net farm income to be much higher than what it was from 2015-to-2019. Net farm income is forecast to come in at $112 billion for 2021. In 2020, farm income topped $120 billion, which was the highest level since 2013.

Positive Balance Projected for Minnesota in Latest Economic Forecast

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Today, Minnesota Management and Budget released the 2021 February Economic Forecast for the state. There is no longer an anticipated shortfall for Fiscal Year 2022-23. Now, Minnesota projects a positive balance of $1.6 billion because of a higher revenue forecast, lower state spending and an increased surplus for the current fiscal year. View the presentation.

Farm Credit Conditions Improve

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There was a dramatic improvement in farm credit conditions for the Upper Midwest region in the final three months of 2020. More than three-quarters of the agricultural lenders surveyed in the fourth quarter by the Federal Reserve Bank of Minneapolis reported an increase in farm incomes. Just under half of the lenders said loan repayment rates have increased. The value of non-irrigated cropland increased 3.6 percent from one year ago. Cash rents for that ground rose more than six percent. Lenders in North Dakota reported the largest increase in land values, up 8.5 percent.

In a Down Ag Economy, Focus on What You Can Control

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In today’s current economy, the average and below average business managers are at risk. Virginia Tech professor emeritus Dr. David Kohl made that point at a Bell Bank event in Fergus Falls and Moorhead. Kohl said farmers must know their numbers, monitor finances and execute a marketing and risk management plan.
 
“You’re not going to make a profit every time, but if you focus on fundamentals and manage around the things that you can control, the odds will be in your favor.” According to Kohl, 83 percent of the U.S. farm balance sheet assets are in farmland.