Farm sector profits forecast to remain above average in 2022
February 25, 2022 by U.S. Department of Agriculture, Economic Research Service
Net farm income, a broad measure of profits, is forecast to have increased by $23.9 billion (25.1 percent) in 2021 relative to 2020 and is forecast to decrease by $5.4 billion (4.5 percent) in 2022 relative to 2021. Forecast at $113.7 billion in 2022, net farm income would be 15.2 percent above its 2001–20 average of $98.7 billion when prior years are adjusted for inflation. In inflation-adjusted 2022 dollars, net farm income is forecast to decrease by $9.7 billion (7.9 percent) in 2022 from 2021.
Net cash farm income is forecast to have increased by $17.0 billion (14.5 percent) in 2021 relative to 2020 and is forecast to increase by $1.9 billion (1.4 percent) to $136.1 billion in 2022 relative to 2021. When adjusted for inflation, 2022 net cash farm income is forecast to decrease by $2.9 billion (2.1 percent) from 2021. Net cash farm income in 2022 would be 13.6 percent above its 2001–20 average of $119.8 billion. Net cash farm income encompasses cash receipts from farming as well as farm-related income (including Government payments) minus cash expenses. It does not include noncash items—including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings—reflected in the net farm income measure above.
Cash receipts from the sale of agricultural commodities are forecast to increase by $29.3 billion (6.8 percent, in nominal terms) from 2021 levels to $461.9 billion in 2022. Total crop receipts are expected to increase by $12.0 billion (5.1 percent) from their 2021 level following higher receipts for soybeans, corn, cotton, and wheat. Total animal/animal product receipts are expected to increase even more, by $17.4 billion (8.9 percent), following higher receipts for milk, cattle/calves, and broilers.
While 2022 cash receipts overall are expected to increase, lower direct Government payments and higher production expenses are expected to counteract their net effects. Direct Government payments are forecast to fall by $15.5 billion (57 percent) from 2021 to $11.7 billion in 2022. The decrease is expected because of lower supplemental and ad hoc disaster assistance for COVID-19 relief in 2022 compared with 2021. Meanwhile, total production expenses, including operator dwelling expenses, are forecast to increase by $20.1 billion (5.1 percent) to $411.6 billion (in nominal terms) in 2022. Spending on nearly all categories of expenses is expected to rise with large increases in feed and fertilizer-lime-soil conditioner expenditures. | READ MORE