After reaching an eight-year high thanks to massive pandemic payments in 2021, net farm income — USDA’s gauge of profitability — is expected to fall precipitously this year. The USDA will make its first forecast of farm income on Friday.
Income would fall in the face of higher costs of production and federal payments that will be a fraction of last year’s $27 billion, according to analysts. Commodity prices and ag exports would remain strong but not high enough to offset the expiration of pandemic relief programs.
“Farmers will likely see a steep drop in net farm income in 2022 as many inputs costs have increased substantially over the last year and the likelihood of government payments is low,” wrote two Kansas State University economists in projecting Kansas farm income this year. It would be an abrupt change after record income for many farms in the state in 2021.
Net farm income would plunge 19 percent this year, to a still-strong $99 billion, said the FAPRI think tank at the University of Missouri in an estimate last fall. At that level, farm income would be the second-highest since the record $123.7 billion in 2013. The USDA has forecast farm income at $116.8 billion for 2021.