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No more ad hoc payments a big “what if?” for farmers in 2021

Will some farms be pushed to the brink financially if ad hoc government programs go away in 2021?

Nathan Kauffman with the Federal Reserve Bank of Kansas City says unfortunately, it’s a question that has to be considered given that direct payments accounted for about 40 percent of net farm income this year.

If you take off those government payments, it does represent a decline in farm income. This would’ve been though, before the increases that we saw in commodity prices more recently.”

U.S. farmers collectively have made around $100 billion so far this year, with Market Facilitation and Coronavirus Food Assistance Program payments comprising nearly $60 billion of that total.

During a newsmakers virtual session hosted by the National Association of Farm Broadcasters Wednesday, Kauffman says the fall rally has presented a more optimistic view for commodity prices.

“So as we go into 2021, my guess on this is if we were to not see payments being made to that extent, we probably would see a little bit more financial pressure on the order of how we had been seeing that progress in the years prior to 2020.”

He says if the price recovery continues, it will help mitigate financial concerns for most corn and soybean producers.

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