Farms and Farm Households During the COVID-19 Pandemic

The coronavirus pandemic has widely affected the U.S. economy, including the farm sector and farm households. Farm businesses have experienced disruptions to production because of lowered availability of labor and other inputs, and reductions in output prices resulting from declines in demand for commodities in certain market segments.

In response to the economic turmoil from COVID-19, Congress passed six economic relief and stimulus bills in 2020 to provide financial assistance to farm businesses and farm households. USDA and other government agencies worked to implement authorized programs in 2020 and 2021.

Farm Sector Income During the Pandemic

The USDA Economic Research Service (ERS) releases farm income and financial forecasts three times per year. How the coronavirus (COVID-19) pandemic affected the 2020-21 farm financial indicators is reflected in the current farm income estimates and forecasts, released on September 2, 2021.

During the pandemic, the farm income outlook evolved because of changing conditions, including changes in commodity prices, production, and government support. For example, projections for the value of agricultural sector production, a key component of farm income, shifted throughout 2020 and 2021.

In early February 2020, just prior to the outbreak of the pandemic in the U.S., the combined value of production for eight major crops—barley, corn, upland cotton, oats, rice, sorghum, soybeans, and wheat—for the crop year 2020/21 was forecast at $108.8 billion based on price and production quantity projections from USDA Agricultural Projections to 2029. Starting in May 2020, the World Agricultural Supply and Demand Estimates (WASDE) report had price and production projections for the crop year 2020/21 and with the June 2020 WASDE report, the combined value of production forecast was revised down 5 percent, to $103.7 billion.

Three months later, in September 2020, the forecast was revised up, to $110 billion, 1 percent above the pre-pandemic February 2020 forecast. With the May 2021 WASDE report, the 2020/21 crop year price and production projections became estimates, and the value of production was estimated at $128.0 billion, 18 percent above the February 2020 forecast. Most of the upward revisions in September 2020 and May 2021 were because of higher commodity prices rather than changes in production quantities. Any further revisions to the WASDE data for 2020/21 after May 2021 are likely to be small.

The 2020 forecast for the combined value of production of six major animal/animal products (beef, pork, broilers, turkeys, eggs, and milk) fluctuated throughout the 2020 calendar year but remained lower than the pre-pandemic forecast. The pre-pandemic January 2020 forecast of the combined value of production for beef, pork, broilers, turkeys, eggs, and milk was $144.1 billion. In June 2020, that forecast was revised to $17.9 billion (12 percent). The September 2020 forecast was slightly higher than the June forecast at $127.5 billion. By May 2021, the value of production was estimated at $131.3 billion, 9 percent below the pre-pandemic January 2020 forecast.

For the farm income forecasts, ERS creates calendar-year forecasts of cash receipts and value of production based on the WASDE and other data.

Federal Financial Assistance to the Agriculture Sector

In response to the economic turmoil from COVID-19, Congress passed 6 economic relief and stimulus bills in 2020. Using the authority from one of the bills, the USDA created the Coronavirus Food Assistance Program (CFAP), which was specifically targeted to farm operations. Other Federal departments and agencies created more general programs for which some farm operations were eligible, such as the Paycheck Protection Program (PPP), or expanded eligibility to the agriculture sector (such as expanded eligibility for the Economic Injury Disaster Loan Program (EIDL)).

Coronavirus Food Assistance Programs

USDA developed and implemented two rounds of funding for the Coronavirus Food Assistance Program. We refer to the original round as CFAP 1 and the second round as CFAP 2. Both rounds combined provided $23.5 billion ($10.5 billion from CFAP 1 and $13.0 billion from CFAP 2) in direct payments to farmers and ranchers in 2020. CFAP provided direct payments to producers who faced market disruptions, increased production costs, and reduced farm-level prices.

Payments reported on at the end of 2020 from both rounds of CFAP totaled $11.5 billion for producers of animal and animal products and $12.0 billion for crop producers.

The USDA website provides additional details about CFAP programs, including current levels of payments under CFAP1 and CFAP2 by commodity and State.

USDA Pandemic Assistance to Producers

On March 24, 2021, USDA announced a new initiative, USDA Pandemic Assistance to Producers, to provide financial assistance to producers who felt the impact of COVID-19 market disruptions. USDA is dedicating at least $6 billion to this initiative that aims to reach a broader set of producers than in previous COVID-19 relief programs. USDA has made additional payments to producers under existing CFAP programs and also rolled out new programs under the initiative. More information about USDA Pandemic Assistance to the sector, including direct payments to producers, may be found on the website.

While much of the assistance is to be paid directly to farmers, the initiative includes some provisions for funding research, training, and outreach. And some payments are not targeted for farm operations. In the ERS farm income statistics, only direct, financial assistance to agricultural producers is included as income.

Paycheck Protection Program

The Paycheck Protection Program (PPP) is a program implemented by the Small Business Administration (SBA) and intended to help small businesses—including farm operations—keep employees on the payroll and/or bring back furloughed or laid-off workers. To be eligible, a business needed to either have positive employee payroll costs or positive income, and the loan would be forgiven if used to meet the program criteria.

Under this criteria, 2019 ARMS data indicated that 72 percent of all family farm operations would have been eligible to receive a PPP loan. Using publicly available data from the SBA, we found that in 2020 the agriculture sector received $6.0 in PPP forgivable loans. The crop sector received $3.9 billion (65 percent of the total) and the livestock sector received $2.1 billion (35 percent of the total). In 2021, farms received $8.7 billion in forgivable PPP loans based on SBA data through June 30, 2021.

COVID-19 Related Assistance for Family Farm Households

Farm households may be affected by the pandemic through loss of wages and benefits from off-farm jobs or off-farm businesses that supplement income from farming. Family farm households could receive Federal COVID-19 related financial assistance from two main sources: Economic Impact Payments and Federal Pandemic Unemployment Compensation.

Economic Impact Payments

Economic Impact Payments (EIP) were meant to provide households with an immediate injection of cash to spur demand and mitigate the economic downturn. The full EIP amount in 2020 was $1,200 for individuals or $2,400 for couples filing jointly, and households with dependents received an additional $500 per dependent.

ERS estimated the amount of these payments using 2019 ARMS data. These estimates indicate that the median married farm household would have received an EIP equivalent to 30 percent of one month’s income, while the median unmarried farm household would have received payments equivalent to 24 percent of one month’s income. These estimates will be revised when the 2020 ARMS data are released in December 2021.

Federal Pandemic Unemployment Compensation

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided $600 per week in Federal Pandemic Unemployment Compensation (FPUC) to those who were unemployed from March 29 to July 25 in 2020 due to the pandemic. These FPUC benefits were in addition to existing State unemployment benefits and were available to anyone who qualified for at least $1 of unemployment benefits.

According to 2019 ARMS data, 71 percent of farm households had one or more household members who earned off-farm salaries or wages. Among those farm households reporting off-farm income, 89 percent of their total household income was attributed to off-farm sources. Excluding residence farms (small farms whose principal operators report being retired from farming or having a primary occupation other than farming), 57 percent had off-farm income that contributed 45 percent of their total income.

Farm Household Income and the Pandemic

The latest ERS farm household income estimates for 2020 and forecasts for 2021 were released on September 2, 2021, and reflect the observed and expected continued effects of the pandemic. Please visit the Farm Household Well-being topic page to learn more.

For households that operate a farm, total household income is a combination of income earned from the farm and off-farm income. Off-farm income sources vary by household. In 2019, the majority (61 percent) came from wages and salaries of operators and other household members, and the remainder came from:

  • transfer income (19 percent),
  • non-farm business income (11 percent),
  • interest and dividend income (4 percent), and
  • other sources of income (6 percent).

Of these, the loss of wages and salaries earned off the farm is most likely to result in a decline in household income because of COVID-19.

On December 1, 2021, ERS will release estimates of 2020 farm household income based on data from the 2020 ARMS. Summaries and analyses of farm household income based on the 2019 Agricultural Resource Management Survey (ARMS) do not cover the pandemic but can provide insights into the potential impact of COVID-19 on farm households, including decreased employment rates in 2020.

Source: USDA