Average net farm income on Illinois grains farms was above average in 2020 primarily because of higher corn and soybean prices in the second half of 2020 federal aid through the Coronavirus Food Assistance Program and Payment Protection Program.
University of Illinois Agricultural Economists Gary Schnitkey, Krista Swanson and Nick Paulson said in a study outlined on Farmdocdaily. Despite higher net farm income, farmers did not increase family living relative to 2019. Instead, capital purchases were above average, and working capital increased.
2021 NET FARM INCOMES
The number of farms included in the averages varies by year, the economists said. In 2020, more than 2,100 farms were included in the averages. The average farm size was 1,300 acres, but there is a considerable range in size from farms below 500 acres to farms with more than 15,000 acres.
In 2020, the average net farm income on these farms was $256,000 per farm, considerably above average net farm income from 2014 to 2019 of $78,000, they said. From 2014-2019, corn and soybean prices were much lower than during the period of expansion in domestic ethanol production and increased export demand from 2006 to 2013.
From 2006-2013, net farm income averaged $189,000, the economists said. In 2020, net farm income was above the 2006-2013 average and was the third highest in history, surpassed only by 2011 income of $274,000 and 2012 income of $298,000.
Corn and soybean prices were very low until August and then began to rise, improving expectations for returns from grain sales later in the year, they said. For example, during the first week of August, cash prices in central Illinois averaged near $3.05 per bushel and $8.70 per bushel for soybeans.
By the end of 2020, prices increased, reaching $4.75 for corn and $13.00 for soybeans, the economists said. Higher prices, combined with above-trend yields on many farms, resulted in above-average crop revenue on most grain farms.
Additional government payments also increased income, they said. In 2020, the administration introduced the Coronavirus Food Assistance Program to counter the negative impacts of the pandemic on global demand.
In addition, many farmers applied for the Paycheck Protection Program and Economic Disaster Assistance Loan assistance offered through the Small Business Administration, they said. These programs contributed about $74,000 to farmer income, or about 28% of income. Without these payments, 2020 incomes would have been $182,000.
Family living declined from $84,000 in 2019 to $81,000 in 2020, a decline of close to 3%, they said. Family living has been increasing at about a 2.8% per-year rate and is relatively stable from year to year.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $123.41 to $125.00 per cwt, compared with the previous week’s range of $123.68 to $125.06. FOB dressed steers and heifers went for $194.25 to $196.03 per cwt, versus $194.31 to $196.10.
The USDA choice cutout Wednesday was down $1.09 per cwt at $286.62, while select was off $4.87 at $262.91. The choice/select spread widened to $19.93 from $19.93 with 114 loads of fabricated product and 43 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were down $0.05 at $1.15 to $1.30 a bushel over the Dec futures and for southwest Kansas were unchanged at $0.40 over Dec, which settled at $5.32 1/4 a bushel, down $0.05 1/4.
No contracts were tendered for delivery Wednesday against the Oct live cattle contract.
The CME Feeder Cattle Index for the seven days ended Tuesday was $152.88 per cwt up $0.09. This compares with Wednesday’s Oct contract settlement of $156.80 per cwt, up $0.70.