Higher prices for corn, soybeans, hogs, cattle, and broiler chickens — top U.S. ag products — will boost net farm income to $113 billion this year, the highest since 2013, estimated the Agriculture Department on Thursday. Income would be 26 percent higher than the 10-year average, reflecting the economy-wide recovery from the pandemic.
Propelled by the global economic recovery from the pandemic, U.S. farm exports will set back-to-back sales records this fiscal year and in the new year beginning on Oct. 1, the government forecast on Thursday. China would account for $1 of every $5 in exports during the two-year span, with annual purchases running more than $10 billion above its previous record, set in 2014.
The federal program that pays landowners to take environmentally fragile land out of crop production to prevent erosion, protect water quality, and preserve wildlife habitat will expand for the first time this year after losing ground annually since 2007. The USDA said on Monday that it expected a net gain in acreage in the Conservation Reserve Program, which was retooled in April to help slow climate change.
Fueled by strong commodity prices and continued pandemic assistance, farmland values are skyrocketing, up by 14 percent in the central Midwest and by 10 percent in the central Plains, said the Federal Reserve banks in Chicago and Kansas City on Thursday.
Global trade in food and agricultural products grew by 3.5 percent last year, according to the WTO, leading to descriptions that the sector was robust and resilient in the face of the worst pandemic in a century. However, a USDA working paper says the impact of the coronavirus was obscured by such factors as the de-escalation of the Sino-U.S. trade war.
Although China has yet to fulfill its "phase one" promises of mammoth purchases of U.S. farm exports, "the fact is, they need us," said Agriculture Secretary Tom Vilscak during a digital news conference. He added that, with China back in the U.S. market, commodity prices are high enough that, "I'm not sure there's necessarily a need for any trade-related assistance [to farmers] at this point."
U.S. ethanol production plunged 13 percent last year due to the pandemic, costing the industry around $4 billion in sales. But it may recover fully by 2023, on the strength of larger exports and rising domestic use of higher blends of ethanol into gasoline, said the Food and Agricultural Policy Research Institute.
U.S. farmers will respond to high commodity prices by harvesting their largest soybean crop ever and a corn crop that could tie the record set in 2016, projected USDA on Friday. Delivered to a hungry world recovering from the pandemic, the 2021 corn and soybean crops would fetch some of the highest farm-gate prices in years.
U.S. farm income will be a strong $111.4 billion this year, 20 percent above the 10-year average, thanks to a recovery in crop and livestock revenue and larger than usual federal payments, said the USDA. Higher market prices, particularly for corn, soybeans, cattle and hogs, and larger production were forecast to boost farm receipts by $20.4 billion from 2020's level.