Trends in Ohio Government Payments During the COVID-19 pandemic
By: PhD student Rabail Chandio and Professor Ani Katchova, Farm Income Enhancement Chair, in the Department of Agricultural, Environmental, and Development Economics (AEDE), OSU, Anil Giri, Research Agricultural Economist and Dipak Subedi, Agricultural Economist at the Economic Research Service, USDA, and Nick Paulson, Professor and Gardener Hinderliter Professor in Farm Management in the Department of Agricultural and Consumer Economics at the University of Illinois, Urbana-Champaign.
In 2021, net cash income for the US and Ohio farms were higher than the 21-year average. As expected, a major component of farm income was the government payments for various support programs, including the coronavirus pandemic support. This report provides details on how government payments evolved for farmers in Ohio and the US in the recent past after a record high in 2020.
USDA – Economic Research Service data released on Feb. 7, 2023, show Ohio producers had a record high net cash income of $4.65 billion in 2021 coming from a gross cash income of $13.63 billion in inflation-adjusted 2023 dollars. In inflation adjusted dollars, both the net and gross cash incomes were higher than the 21-year averages of $3.1 billion and $11.5 billion, respectively. Net cash farm income encompasses gross cash farm income (cash receipts from farming as well as farm-related income and government payments) minus cash expenses. It does not include noncash items—including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings—reflected in the net farm income measure. Therefore, a major contributor to the high net and gross cash incomes in 2020 and 2021 was not only high commodity prices leading to higher cash receipts but also the record high government payments.
At the onset of the pandemic, the supply chain disruptions and uncertainty in the market signaled lower incomes and uncertain prices, creating the need for higher PLC and ARC payments to farmers in addition to COVID-support payments. As commodity prices rallied beginning in August 2020, the PLC and ARC programs triggered lower levels of total support in 2021. Moreover, adhoc disaster assistance payments remained the largest component of government payments in 2021. As the US agricultural sector entered a period of higher income with higher commodity prices, ARC and PLC program payments are expected to be lower for 2022.