According to a recent report from the U.S. Department of Agriculture (USDA) Economic Research Service (ERS), the COVID-19 pandemic caused significant disruptions to the U.S. economy, including the agricultural sector. While overall farm income levels remained relatively stable in 2020 due to federal relief programs, the financial impact varied across different farm operations and households. The report examines three key areas:
-
Federal COVID-19 relief payments to farms
-
Farm household resilience to off-farm unemployment
-
Changes in farmland values and rental markets
Key Findings
Federal Relief Programs Supported Large-Scale Farms
Government assistance, including the Coronavirus Food Assistance Program (CFAP) and the Paycheck Protection Program (PPP), played a crucial role in sustaining farm incomes. However, the distribution of funds favored larger farms:
-
Farms with gross cash farm income (GCFI) of $1 million or more received over half of all CFAP and total government payments in 2020.
-
Without CFAP support, 6% of recipient farms would have faced negative net farm income.
-
Large farm operations, which account for the majority of hired labor expenses, received a smaller share of PPP loans due to program eligibility constraints.
Farm Households Faced Job Losses and Income Uncertainty
The USDA report found that farm households experienced off-farm unemployment rates similar to nonfarm households, but some regions and job types were hit harder:
-
Midwest and Atlantic region farm households had the highest unemployment rates.
-
Households in metro counties were more affected than those in rural areas.
-
Low-wage and part-time workers were more likely to lose jobs, while higher-wage workers remained more stable.
-
Many farm households adopted alternative income strategies, such as increasing off-farm work hours or selling assets. However, wealthier households were better positioned to recover.
Surge in Farmland Demand Amid Low Interest Rates
Despite economic uncertainty, demand for farmland increased, reversing a multi-year decline in real land values:
-
Between 2019 and 2021, cropland values increased by 2.2% per year, while pastureland values rose by 0.2%.
-
Farmland rents decreased, suggesting that demand for ownership outpaced demand for leasing.
-
Farmland sales increased by 11-12%, with 2.9 million acres of cropland and 2.4 million acres of pasturelandchanging hands annually.
Conclusion
The USDA report highlights how the COVID-19 pandemic reshaped the financial landscape for U.S. agriculture. Federal aid played a critical role in stabilizing farm income, but benefits were unevenly distributed. Farm households faced employment challenges, while farmland demand surged due to historically low interest rates.
For a full analysis, read the complete USDA ERS report here: www.ers.usda.gov
