At the beginning of the year, the United States Department of Agriculture (USDA) forecast that farm net income would increase by $3.1 billion.
Now it’s anybody’s guess where it will end up, but the COVID-19 pandemic is almost certain to reduce net income from last year.
"Trying to figure out the true extent of COVID-19's impact is like staring into a deep, deep mist," said Benjamin Duyck of the Agriculture Equipment Manufacturers Association.
On the supply side, immediate impacts have been a loss of marketing outlets, reduced processing capacity, labor supply restrictions, border restrictions and transportation issues. In the longer-term, supply side challenges are led by ongoing pricing pressures, he writes in an article released this week.
For example, the corn market has been hard hit by a sharp reduction in fuel consumption resulting in much-reduced demand for ethanol.
Futures prices (for ethanol) were down by 23 per cent in mid-May and "that is naturally going to have impacts on demand for corn," said Dr. Robert Johansson, chief economist for the USDA.
Corn futures prices fell 19 per cent.
