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2019 Kansas Net Farm Income Up, Thanks to Government Support
Kansas Ag Connection - 05/22/2020

Kansas net farm income rose again in 2019, largely owing to government support payments meant to buffer the effect of trade disputes amid lackluster commodity prices, according to the annual summary by the Kansas Farm Management Association.

Net farm income among KFMA members averaged $110,380 in 2019, up from $101,274 a year earlier and well above the five-year average of $66,336. Net farm income has risen every year since 2015 when income plummeted to a historically low $6,744.

The data were compiled for the 2019 KFMA Executive Summary. Although not all farms are KFMA members, the numbers serve as a barometer of Kansas agriculture in any given year.

"We are continuing in a period of tight margins and cash flow constraints as we move forward into 2020," said Kevin Herbel, KFMA executive director.

"It's difficult to think back just a few months to before the changes brought into our lives by COVID-19," Herbel said. "As 2019 ended, none of us had any thought of PPP or EIDL loans, or that additional unknowns and complications would impact trade agreements and influence domestic markets," referring to financial programs designed to help small businesses, including farmers caught up in the effects of the pandemic.

"Strong yields in many parts of the state were a significant factor in 2019," he said, citing good dryland fall crop yields in northwest and north central Kansas and impressive wheat yields in southwest areas.

Similar to a year earlier, however, the increase in 2019 net farm income was primarily linked to crop insurance and government payments made to farmers to offset the disruptive effects of trade disputes with other countries that began pre-COVID-19. The total of all government payments received by KFMA farms last year was more than 70% of net farm income. Without those payments, the 2019 average net farm income would have been $30,361 per farm.

"It just indicates the importance of a strong safety net program that allows farmers to keep producing in order to help feed the world," said Mark Dikeman, KFMA associate director.

Farms in four areas of the state showed stronger net farm income compared with 2018. However, net farm income in south central and southeast Kansas fell compared to the prior year, at least partially because of more precipitation than usual during the critical planting and growing seasons.

Net farm income in northwest Kansas averaged $127,244 versus $116,077 a year earlier; southwest averaged $188,051 versus $153,660; north central averaged $109,961 versus $76,238; south central $70,566 versus $99,709; northeast $109,768 versus $60,944; and southeast $111,310 versus $136,916.

The KFMA summary breaks down data by type of farm, for example average dryland crop, cow herd, crops and beef. It provides comparisons against the previous four years in categories such as value of livestock produced, value of farm production, depreciation, number of workers, crop production costs/crop acre, and family living expenses.

"To get a true picture of 2019, you have to look at the fall of 2018," said Brian Manny, KFMA economist in south central Kansas, adding that the area experienced one of the wettest Octobers in history during the normal wheat planting time that year.

Will Feldkamp, KFMA economist in north central Kansas said that area had "phenomenal wheat yields" and good soybean yields last year.

"We're used to getting a lot of rain but had more than usual in 2019. Crops were planted late because of it," said Dillon Rapp, KFMA economist in southeast Kansas, one of the areas where net farm income slipped from a year earlier.

In addition to this year's weather challenges and ongoing trade issues, COVID-19 lends even more uncertainty to the financial picture for Kansas farms, Herbel said. He encourages farmers, whether KFMA members or not, to use the KFMA data as a benchmark against their own farms to identify strengths and weaknesses.

"There is much producers can't control, but there are things they can control," Herbel said. "A good set of records will help identify production costs, can provide a starting point for market planning, and can help a farm manager understand their farm business better than anyone else. The investment of time into this process is important to manage today's economic environment successfully."

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