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Farm income to remain stable in North America

Recent research and outlook statements from both the U.S. and Canada show that despite various economic and environmental difficulties, farms will bring in above-average income.

The USDA’s Economic Research Service estimated that net farm income increased by 25.1 percent, or $23.9 billion, in 2021 relative to 2020. While net farm income is expected to decrease by $5.4 billion, or 4.5 percent, in 2022 relative to 2021, with a forecast of $113.7 billion, 2022’s net farm income would still be 15.2 percent above its 20-year average (2001 to 2020) of $98.7 billion when adjusted for inflation.

Net cash farm income is estimated to have increased by $17 billion, or 14.5 percent, in 2021 relative to 2020 and is forecast to increase another $1.9 billion (1.4 percent) in 2022 to a total of $136.1 billion. That total would be 13.6 percent above its 20-year average.

Total crop receipts are expected to increase by $12 billion (5.1 percent) from 2021, following higher receipts for soybeans, corn, cotton and wheat. Animal and animal products are expected to increase even more by $17.4 billion (8.9 percent) following higher receipts for milk, cattle/calves and broilers. However, lower direct government payments and higher production expenses are expected to counteract net effects. Direct government payments are forecast to fall to $11.7 billion in 2022, representing a decrease of 57 percent. The decrease is primarily due to lower supplemental and ad hoc disaster assistance for COVID-19 relief. Production expenses are also expected to increase.

Meanwhile, Agriculture and Agri-Food Canada (AAFC) found that Canadian farmers and producers’ income grew to record levels despite the ongoing economic effects of COVID-19 and other events such as the summertime drought and the floods in British Columbia. Net cash income for 2021 is estimated at CAD $26.6 billion (approximately USD $21 billion) for 2021, representing a 49 percent increase in prices. While the drought that affected areas such as Manitoba, Saskatchewan and northwestern Ontario caused production losses, grain and oilseed prices were up substantially, resulting in a 17 percent increase for crop receipts.

Canada’s livestock sector was also strong, with hog prices being a standout, and overall receipts increased by 15 percent. Program payments are also estimated to have increased due to higher crop insurance payments.

Net operating income per farm is forecast to have increased by 59 percent in 2021.

While net cash income is forecast to decline by 25 percent to CAD $19.7 billion in 2022 (driven primarily by the impact of the drought), AAFC states that what might be viewed as a substantial decrease “is relative to the record levels of 2021” and that the forecast for this year will still be the second-strongest year on record. Average net worth of Canadian farms is also expected to remain strong for 2022.•