January 24, 2020

Agriculture and the Stimulus Bill; House Ag Committee Hearing; and Payment Limit Considerations

Agriculture and the Stimulus Bill

Last month, a Congressional Research Report (CRS) entitled, “U.S. Farm Income,” indicated that, “Despite high production costs, 2008 represented another year of record profitability for the U.S. farm economy as a whole [related graph]. According to USDA’s Economic Research Service (ERS), national net farm income—a key indicator of U.S. farm well-being—rose to a record $86.9 billion in 2008, marginally above the previous year’s record ($86.8 billion). The growth in cash receipts to a record $323.4 billion for crop and livestock sales (up $38.6 billion or 14% from 2007) was nearly offset by a surge in production costs (up $38.2 billion or 15%) to a record $292.5 billion.”

The CRS report explained that, “Within the farm balance sheet, total farm asset value of $2,359 billion and total farm debt of $212 billion are both projected at record levels in 2008. The debt-to-asset ratio of 9.0% is down sharply from last year’s value of 9.6% and represents the lowest level since 1960, suggesting a strong financial position for the agricultural sector as a whole.

However, less than ideal market conditions heading into 2009 suggest dim prospects for the longer-term farm income outlook, albeit surrounded by considerable uncertainty. On the one hand, the global financial crisis, economic recession, rising unemployment, limited credit availability, and plummeting asset values that persist in early 2009 have contributed to substantial ‘demand destruction’ (i.e., a severe weakening of consumer demand), which bodes poorly for farm commodity price prospects. On the other hand, weak energy markets and declining input prices could provide some spark to both producer investment and consumer demand for agricultural sector products, perhaps by the middle to latter half of the year. USDA will release its first U.S. farm income forecasts for 2009 on February 12, 2009.”