USDA projects farm income to rise around 5 percent in 2022
The USDA said Thursday it expects farm income for 2022 to rise 5.2 percent, to $147.7 billion, from a year earlier, with cash receipts for agricultural commodities at a record level. But higher production expenses and lower government Covid-19 payments are presenting some headwinds.
The slight bounce in income comes after 2021, when farm income shot up $45.9 billion, or more than 48 percent, to the highest inflation-adjusted level since 2013. If 2022 income were adjusted for inflation — now at the highest level in decades — it would have declined 0.9 percent from 2021 levels.
Net cash farm income is forecast at $168.5 billion in 2022, an increase of $22.1 billion, or 15.1 percent, relative to 2021. Net cash farm income includes cash receipts from farming as well as farm-related income, such as government payments, minus expenses. It does not include non-cash items — changes in inventories, economic depreciation, and rental income — reflected in net farm income.
Cash receipts from the sale of agricultural commodities are forecast to increase $91.7 billion, or 21.2 percent, from 2021 levels to $525.3 billion in 2022, reflecting high prices for corn, soybeans and wheat. Total animal and animal product cash receipts are expected to rise 28.3 percent, following increases in all categories. These increases would put total cash receipts in 2022 at their highest level on record, even after adjusting for inflation, the USDA said.
Even with this growth in cash receipts, lower direct government payments and higher production expenses are expected to moderate overall income growth, it said. Direct government payments are forecast to fall $12.8 billion, or nearly 50 percent, from 2021, to $13 billion in 2022, reflecting lower supplemental and disaster assistance for Covid-19.
Production expenses are forecast to increase $66.2 billion, or 17.8 percent, to $437.3 billion in 2022. Spending on all categories is expected to rise, with the largest increase in fertilizer-lime-soil conditioner expenditures up 44 percent.
Earlier this month, the Federal Reserve said high commodity prices were fueling a strong farm economy in the Midwest and Plains this summer, but agricultural lenders were worried that higher prices for seeds, fertilizer, fuel and other inputs will put the brakes on farm income in the near term. “Lenders reported growing concerns about 2023,” said the Kansas City Federal Reserve Bank, one of four regional Feds to survey bankers every three months about farm finances.