When crop insurance indemnities and unemployment benefits are counted, the government sent $57.7 billion to farm operations and farm households in 2020, while the pandemic sent the U.S. economy into recession, said a working paper by USDA economists. It was the highest estimate yet of federal assistance to farmers last year and the most inclusive.
“Using data from the Small Business Administration, Bureau of Labor Statistics, and multiple sources within USDA, we find $57.7 billion in total financial assistance was provided to farm operations and households in calendar year 2020,” said the Economic Research Service working paper. The tally included $35.2 billion in pandemic relief, $16.8 billion from non-pandemic programs, which included trade-war payments, and $5.7 billion in net indemnities from crop insurance.
The pandemic sent federal assistance into the stratosphere compared to preceding years. Before the Sino-U.S. trade war and the coronavirus, direct government payments to farm operations averaged around $10 billion. The USDA says direct farm program payments soared to record levels and accounted for 38 percent of net farm income last year.
But the USDA estimate of direct farm payments did not capture payments to farm households that were unrelated to farm income. For many farm households, off-farm income is a significant part of earnings. The working paper included estimates of stimulus checks and federal unemployment compensation. “These combined to total approximately $5.6 billon distributed to farm households.”
The USDA forecast farm income at a strong $111.4 billion this year, thanks to a recovery in crop and livestock revenue and federal payments that would be a decline from 2020’s record. If the February forecast proves true, farm income, a gauge of profitability, would be 8 percent lower than last year’s $121.4 billion, the highest in nine years.
However, Congress enacted a coronavirus bill in March, so additional aid is forthcoming. The USDA said $7 billion has been committed through the new Pandemic Assistance for Producers program with an additional $2.5 billion to be announced in coming weeks. The administration also expects to spend $6 billion through its Build Back Better program to strengthen the food system.
There are some complaints at the farm level of delays in putting the pandemic aid programs into action. Payment totals for the Coronavirus Food Assistance Program, the major conduit for aid, were relatively stagnant for the past three weeks.
The ERS started the working-paper series to provide preliminary analysis about the impacts of the pandemic on agriculture, the environment and rural America in a timely manner. The papers “have not gone through the review and editorial process generally accorded official ERS publications, but they have been reviewed by ERS economists and social scientists through an expedited review process,” said a note on the front page of the report.
The Covid-19 working paper is available here.