Farm Business Income

Suggested citation for linking to this discussion:

U.S. Department of Agriculture, Economic Research Service. Farm Sector Income & Finances: Farm Business Income, December 1, 2021.

Average Net Cash Farm Income for U.S. Farm Businesses Forecast Up In 2021

Farm businesses are farms with annual gross cash farm income of at least $350,000 or operations with less than $350,000 in annual gross cash farm income but farming is reported as the operator's primary occupation. Farm businesses account for half of U.S. farms, but they contribute more than 90 percent of the farm sector's value of production and hold most of its assets and debt.

Average net cash farm income (NCFI) for farm businesses* is forecast at $89,100 in nominal terms in 2021, up 3.5 percent from 2020. Higher NCFI means more cash available to pay down debt, taxes, cover family living expenses, and invest. NCFI is not a comprehensive measure of profitability because it does not account for changes in noncash income, including adjustments in farm inventory, accounts payable, accounts receivable, the imputed rental value of operator dwellings, and capital consumption.

The average NCFI forecast for farm businesses is mixed among farming regions and commodity specializations. In 2021, farm businesses specializing in hogs are forecast to see the largest increase in average NCFI compared to 2020. Farm businesses in the Fruitful Rim region are forecast to see the largest decline in average NCFI among the nine resource regions. All groupings of farm businesses are expected to see lower levels of average direct Government payments and higher expenses in 2021. See data tables on farm business average net cash income, including:

Average Net Cash Farm Income Outlook for Farm Businesses Varies by Specialization

Average net cash farm income (NCFI) is forecast to increase in 2021 for farm businesses with all crop specializations, except cotton and specialty crops. Farm businesses specializing** in corn are expected to see the largest increase ($77,800 or 43.9 percent) among crop commodities, reaching $255,200. For these farm businesses, growth in cash receipts is forecasted to more than offset increases in cash expenses and declines in Government payments. Similarly, higher cash receipts in 2021 for farm businesses specializing in soybeans, wheat and other crops are expected to lead to higher average NCFI in 2021. In contrast, farm businesses specializing in specialty crops (fruit and tree nuts, vegetables, and nursery/greenhouse) are expected to see the largest dollar ($55,800) and percentage (27.7 percent) decline in average NCFI; these changes are driven by lower Government payments and higher expenses, with cash receipts expected to be relatively unchanged from 2020.

Average net cash farm income for farm businesses specializing in crop production, 2021F compared with 2020
Farm specialization Average NCFI, 2021F Change in average NCFI, 2020–21F
  Dollars Percent
Wheat $168,800 20.0
Corn $255,200 43.9
Soybeans $149,600 40.1
Cotton $276,000 -15.0
Specialty crops 1/ $145,900 -27.7
Other crops $65,300 9.6
NCFI = net cash farm income.
Source: USDA, Economic Research Service, Farm Income and Wealth Statistics data product, Farm business average net cash income by commodity specialization and region. Data as of December 1, 2021.
1/ Specialty crops include fruits and tree nuts, vegetables, and nursery/greenhouse. 

For farm businesses specializing in animals/animal products, average NCFI in 2021 is forecast to decrease for all categories except hogs and poultry. Higher cash receipts for hogs in 2021 are expected to more than offset lower Government payments and higher production expenses. The largest dollar decline in average NCFI is forecast for farms specializing in dairy (down $80,700 to $245,500 per farm). The largest percentage decrease is for farms specializing in other livestock (down 52.3 percent to $5,100 per farm). 

Average net cash farm income for farm businesses specializing in animals/animal products production, 2021F compared with 2020
Farm specialization Average NCFI, 2021F Change in average NCFI, 2020–21F
  Dollars Percent
Cattle/calves $16,900 -17.6
Hogs $444,000 49.0
Poultry $127,000 3.3
Dairy $245,500 -24.7
Other livestock $5,100 -52.3
NCFI = net cash farm income.
Source: USDA, Economic Research Service, Farm Income and Wealth Statistics data product, Farm business average net cash income by commodity specialization and region. Data as of December 1, 2021.

Average Net Cash Farm Income Forecast for Farm Businesses by Region is Mixed

Regional performance of farm businesses can vary considerably because of the heavy geographic concentration of certain production specialties. Five of the nine resource regions (see the FAQ on ERS resource regions) are expected to see average net cash farm income (NCFI) increase in 2021, in nominal terms. Farm businesses in the Heartland are forecast to see the largest dollar ($38,700) and percentage increase (35 percent) in average NCFI per farm. These expected increases are because of higher cash receipts that more than offset lower Government payments and higher expenses. Average NCFI in the Fruitful Rim is forecast to see the largest decrease at $47,100 (26 percent) per farm following the forecast decrease in Government payments and higher expenses.


*Farm businesses are defined as operations with gross cash farm income of more than $350,000 (labeled "commercial") or smaller operations where farming is reported as the operator's primary occupation (labeled "intermediate"). Agricultural Resource Management Survey data for 2020 indicate that 10.8 percent of U.S. farms are commercial, and 39.5 percent are intermediate. Residence farms comprise the remaining 49.7 percent of operations; these are small farms with operators whose primary occupation is something other than farming.

**Commodity specialization is determined by a farm business having at least 50 percent of the value of production from a particular commodity. Farm businesses often produce multiple commodities, so average net cash farm income statistics should not be interpreted as resulting solely from the production and sale of the commodity highlighted as the commodity specialization.