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Farm Income during the Trade War

Summary:
Farm income rose – but income from selling farm products fell. Were it not for direct farm support, income would’ve fallen. Figure 1: Contributions to change in farm income from cash receipts from sales (blue bar), from direct government support (brown bar), and from all other components (green bar). Source: USDA, data of 12/2/2020. Nearly the entire increase in farm income going from 2017 to 2020 is accounted for by the increase in government support. Figure 2: Farm income from cash receipts from sales (blue bar), from direct government support (brown bar), and from all other components (green bar). Source: USDA, data of 12/2/2020. Note that in 2020 the change in direct government support accounted for 2/3 of the change in net farm income. How to wean the farm sector off of government

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Farm income rose – but income from selling farm products fell. Were it not for direct farm support, income would’ve fallen.

Farm Income during the Trade War

Figure 1: Contributions to change in farm income from cash receipts from sales (blue bar), from direct government support (brown bar), and from all other components (green bar). Source: USDA, data of 12/2/2020.

Nearly the entire increase in farm income going from 2017 to 2020 is accounted for by the increase in government support.

Farm Income during the Trade War

Figure 2: Farm income from cash receipts from sales (blue bar), from direct government support (brown bar), and from all other components (green bar). Source: USDA, data of 12/2/2020.

Note that in 2020 the change in direct government support accounted for 2/3 of the change in net farm income.

How to wean the farm sector off of government support is a big question going forward.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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