Fueled by $14.5 billion in Trump tariff payments, U.S. net farm income will climb to its highest total since the commodity boom crested in 2013 and a dramatic rebound from the plunge that accompanied its collapse, the USDA estimated. When crop insurance indemnities are added to “direct farm program payments,” a category that includes trade war aid, land stewardship payments, and traditional crop supports, the government will provide an unusually high 31% of farm income this year.

“There are financial issues out there and stress,” said USDA Chief Economist Robert Johansson, despite the huge federal transfer of cash to farmers and ranchers. Farm bankruptcy rates, while low, are rising and so are indicators such as the debt-to-asset ratio, a measure of solvency, Johansson told USDA’s radio news service over the weekend.

The USDA pegged net farm income, a measure of wealth, at $92.5 billion, up 10% from 2018, due to mammoth federal payments and higher-than-expected commodity prices. Income peaked at a record $123.7 billion in 2013, plunged to a low of $62.2 billion in 2016, and climbed ever since. Stable expenses allowed producers to hold on to revenue rather than pay higher bills.

Senior USDA Economist Carrie Litkowski said indemnities from federally subsidized crop insurance, estimated at $6.5 billion, and direct government payments, estimated at $22.4 billion, would combine to account for 31% of farm income this year. By themselves, direct federal payments would be 24% of farm income, the largest share since 2006.

Market Facilitation Program payments, the official name for Trump tariff payments, will total $14.5 billion for the year, said USDA. The figure includes the final round of 2018 MFP payments, disbursed early this year and two tranches for 2019 — the first released in August and the second shortly before USDA issued its income forecast, said Litkowski during a webinar. “Those are included in our forecast.”

In its final forecast of farm income for this year, the USDA said cash receipts from crops and livestock would increase by $2.2 billion this year, mostly due to higher market prices for crops, particularly corn and vegetables, outweighing declines for wheat and soybeans. Livestock receipts would be marginally higher; milk and hog receipts are up while poultry and eggs are down.

Farm debt is rising more rapidly than the value of farm assets in percentage terms, although farm equity is stable, said the USDA report. The debt-to-asset ratio will rise to 13.4% this year, from 13.3% last year and would be 2 points higher than in 2013 when farm income set a record. The USDA said the rates of return on farm assets and farm equity would rise this year.

Litkowski said the amount of working capital held by producers is down. The farm bankruptcy rate of three per 10,000 this year is double the rate seen during the commodity boom. Johansson said nine out of 10 farms are “pretty stable” financially, which means a portion of producers are highly leveraged.

The USDA is scheduled to make its first estimate of 2020 farm income on February 5. It will update the 2019 forecast at that time, too.

The report, “Farm Sector Income and Finances,” is available here.