High commodity prices have more than offset soaring input costs this year, pushing net farm income up 13.8% over 2021, USDA says in its latest forecast of farm earnings.
The increase to $160.5 billion for the calendar year follows an even bigger increase from 2020 to 2021 – $90.4 billion to $141 billion, ERS said.
When adjusted for inflation, the Economic Research Service said net farm income in 2022 would be 53.3% above its 20-year average of $104.7 billion.
Net cash farm income is forecast to increase 26.5% to $187.9 billion this year.
Net cash farm income is based on cash receipts from farming, plus government payments and other farm-related income, minus cash expenses. Net farm income also factors in depreciation and changes in inventory values.
“Total crop receipts are expected to increase by $45.5 billion (19%) from their 2021 level following higher receipts for many crops with large increases forecast for soybeans, corn, and wheat,” ERS said.
“Total animal/animal product receipts are expected to increase even more from the previous year, by $60.2 billion (30.8%), following increases in receipts for all categories of animal/animal products,” the forecast said.
Two factors limiting income growth this year are lower direct government payments and increased production expenses.
Direct government payments in 2022 will be down $16.5 billion, down 36.3% from 2021, ERS said, noting that the decrease is expected “largely because of lower supplemental and ad hoc disaster assistance for COVID-19 relief in 2022 relative to 2021.”
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Total production expenses, including operator dwelling expenses, “are forecast to increase by $69.9 billion (18.8%) to $442 billion” in 2022, ERS said. “Spending on nearly all categories of expenses is expected to rise, with the largest dollar increase projected for fertilizer-lime-soil conditioner expenditures at $13.9 billion (47%) compared with 2021.”
In September, net farm income was forecast at $147.7 billion for 2022, an increase of $7.3 billion, or 5.2%, over last year. Net cash farm income for 2022 was estimated at $168.5 billion.
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