2022 Farm Sector Income Forecast, February

The USDA’s Economic Research Service (ERS) indicated on Friday that, “Net farm income, a broad measure of profits, is forecast to decrease by $5.4 billion (4.5 percent) from 2021 to $113.7 billion in 2022.”

“Net cash farm income is forecast to increase by $1.9 billion (1.4 percent) to $136.1 billion in 2022, after a forecast increase of $17.0 billion (14.5 percent) in 2021. In inflation-adjusted dollars, 2022 net farm income is forecast to decrease by $9.7 billion (7.9 percent); net cash farm income is forecast to decrease by $2.9 billion (2.1 percent). ”

If realized, net farm income and net cash farm income in 2022 would remain above their 2001–20 average (in real terms).

ERS pointed out that, “Overall, farm cash receipts are forecast to increase by $29.3 billion (6.8 percent) to $461.9 billion in 2022 in nominal dollars;” however, “Direct Government farm payments are forecast at $11.7 billion in 2022, a $15.5 billion (57.0 percent) decrease from 2021 forecast levels.”

Friday’s update stated that, “Corn receipts are forecast to increase by $3.4 billion (4.8 percent) in 2022, resulting from higher quantities sold. Soybean receipts in 2022 are expected to increase $4.6 billion (8.9 percent), as forecasted growth in quantities sold should outweigh effects of lower prices.”

ERS stated that, “USDA pandemic assistance for producers, including the Coronavirus Food Assistance Program (CFAP), provides relief to producers whose operations are directly affected by COVID-19. Payments in calendar year 2022 from these USDA programs are forecast at $3.4 billion compared to $23.5 billion in 2020 and $7.8 billion in 2021.

“Non-USDA pandemic assistance (payments from the Paycheck Protection Program (PPP), administered by the Small Business Administration), ended on May 31, 2021 and no payments are expected in 2022.”

“Farm bill commodity payments under the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs are forecast to decline $4.0 billion in 2021 relative to 2020 and then another $1.9 billion in 2022 to $0.3 billion. ARC payments in 2022 are expected to be $5.1 million, a decrease of $116.7 million from 2021 levels. PLC payments in 2022 are expected be $0.3 billion, a decrease of $1.8 billion from 2021 levels.”

“Conservation payments from the financial assistance programs of USDA’s Farm Service Agency (FSA) and Natural Resources Conservation Service (NRCS) are expected to be $4.2 billion in 2022, up 7.3 percent from 2021. The increase in conservation payments is due to slight increases in Conservation Reserve Program (CRP)-enrolled acres and an increase in payments from NRCS programs.”

With respect to production expenses, ERS noted that, “Farm sector production expenses—including expenses associated with operator dwellings—are forecast to increase by $20.1 billion (5.1 percent) to reach $411.6 billion in 2022.”

More narrowly, ERS pointed out that, “Feed expenses, the largest single expense category, are forecast to increase in 2022 by $3.9 billion (6.1 percent) in nominal terms to $68.9 billion because of higher prices for feed commodities.

“Fertilizer-lime-soil conditioner expenses are forecast to increase by $3.4 billion (12.0 percent) in nominal terms to $31.9 billion.”