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Source: USDA'S ECONOMIC RESEARCH SERVICE, 7/31/20 The effects of the coronavirus (COVID-19) pandemic on the 2020 farm financial indicators, like net farm income, are as yet unknown. ERS’ next Farm Income Forecast to be released on September 2, 2020, will reflect these expected impacts. Please visit the Farm Sector Income and Finances topic page to learn more. The
coronavirus (COVID-19) pandemic has widely impacted the U.S. economy, including
the farm sector and farm households. Farm businesses have experienced
disruptions to production due to lowered availability of labor and other
inputs, and reductions in output prices resulting from declines in demand for
commodities in certain market segments. Additionally, farm households may be
impacted through loss of wages and benefits from off-farm labor that they use
to fund farm production needs, household living expenses, investments, and
payments on farm business debt. Reductions
in available labor affect crop and livestock production, as well as processing
capacity for crop and animal products that leave the farm. Reduced processing
capacity results in lower consumption of certain agricultural commodities.
Although these downstream shocks originate outside of production agriculture,
the shocks manifest themselves in the prices that farmers receive for the
commodities they produce and, hence, their farm income. Historically,
most farm households report a loss from their farming operations and rely on
off-farm income sources for both on-farm and off-farm needs. Off-farm income is
generally more stable and aids in managing farm risks. However, as the pandemic
increases risks associated with farming, it also increases risks off the farm. Farm
households could be impacted by the pandemic through loss of off-farm income or
loss of employment-based health insurance benefits. Off-farm income sources
vary by household. The majority (55 percent) comes from wages and salaries of
operators and other household members, and the remainder comes from:
- transfer
income (18 percent),
- non-farm
business income (15 percent),
- interest
and dividend income (8 percent), and
- other
sources of income (4 percent).
Of
these, the loss of wages and salaries earned off the farm are most likely to
result in a decline in household income due to COVID-19. For the full report, click here.
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