USDA predicts farm income will increase about 5% in 2022

The USDA said Thursday it expects farm income for 2022 to rise 5.2% to $147.7 billion from a year earlier, with cash receipts for agricultural products at a record level. But higher production spending and lower Covid-19 government payments present headwinds.

The slight rebound in income comes after 2021, when farm income jumped $45.9 billion, or more than 48%, to the highest inflation-adjusted level since 2013. If 2022 income was adjusted for inflation – now at the highest level in decades – it would have fallen 0.9% from 2021 levels.

Cash net farm income is forecast at $168.5 billion in 2022, an increase of $22.1 billion, or 15.1%, from 2021. Cash net farm income includes cash receipts from farming plus farming-related income, such as government payments, less expenses. . It does not include non-cash items—changes in inventory, economic depreciation and rental income—reflected in net farm income.

Cash receipts from the sale of agricultural products are expected to increase by $91.7 billion, or 21.2%, from 2021 levels to reach $525.3 billion in 2022, reflecting high corn prices, soy and wheat. Total cash receipts from animals and animal products are expected to increase by 28.3%, 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 spending are expected to moderate overall revenue growth, he said. Direct government payments are expected to fall by $12.8 billion, or nearly 50%, from 2021 to $13 billion in 2022, reflecting a decline in supplementary and disaster relief for Covid -19.

Production spending is expected to increase by $66.2 billion, or 17.8%, to $437.3 billion in 2022. Spending in all categories is expected to increase, with the largest increase being fertilizer, lime and soil amendments, up 44%.

Earlier this month, the Federal Reserve said high commodity prices were fueling a strong agricultural economy in the Midwest and Plains this summer, but agricultural lenders feared that rising prices for seeds, fertilizers, fuel and other inputs does not dampen farm incomes in the short term. “Lenders have reported growing concerns about 2023,” said the Federal Reserve Bank of Kansas City, one of four regional federal authorities to poll bankers every three months on farm finances.

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