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Dry Bulk Market: US Farm Income on Pace to Reach Highest Level in Six Years

Extremely noteworthy to us is that the United States Department of Agriculture recently announced that US net farm income this year will climb to its highest level since 2013. This is very significant as US farmers are not faring nearly as poorly as many pundits and media outlets continue to often report. As a result, US farmers collectively have not been in any real uproar and are not jeopardizing Trump’s re-election chances. US net farm income this year is on pace to total $92.5 billion. This would mark a year-on-year increase of $8.5 billion (10%) and would mark the highest income since 2013’s record $123.7 billion.

Federal government direct farm program payments are contributing to a large amount of the income. Federal government direct farm program payments are expected to end this year at a very robust $22.4 billion, which is $8.7 billion (64%) more than was issued in 2018. This includes the Market Facilitation Program payments, which is the official name for President’s Trump tariff payments that are going to farmers to make up for the weakness in exports. The $22.4 billion in federal government direct farm program payments marks a record for this decade (and includes $14.5 billion in Trump’s Market Facilitation Program payments)

The $22.4 billion in federal government direct farm program payments is 24% of this year’s net farm income. This is a very large percentage. In comparison, federal government direct farm program payments contributed to 16% of net farm income last year. Also of note is that prior to this year, this decade had previously seen federal government direct farm program payments contribute to an average of just 13% of net farm income each year. The trade war continues to negatively affect US grain trade, but farmers are nevertheless generating a large amount of income. With US farmers continuing to fare well, Trump is not receiving nearly as much pushback from farmers as many pundits and media outlets often report. Going forward, it remains unclear when any real trade war agreement will be reached with China.
Source: Jeffrey Landsberg, Managing Director, Commodore Research & Consultancy

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