2022 Farm Sector Income Forecast, December

The USDA’s Economic Research Service (ERS) indicated on Thursday that, “Net farm income, a broad measure of profits, is forecast to increase by $19.5 billion (13.8 percent) from 2021 to $160.5 billion in calendar year 2022.”

“Net cash farm income is forecast to increase by $39.4 billion (26.5 percent) to $187.9 billion in 2022, after an increase of $31.7 billion (27.2 percent) in 2021. In inflation-adjusted dollars, 2022 net farm income is forecast to increase by $10.7 billion (7.2 percent); net cash farm income is forecast to increase by $30.1 billion (19.1 percent) compared with the previous year.

If realized, net farm income would be at its highest level since 1973 and net cash farm income at its highest level on record (in inflation-adjusted dollars).

ERS pointed out that, “Overall, farm cash receipts are forecast to increase by $105.7 billion (24.3 percent) to $541.5 billion in 2022 in nominal dollars;” however, “Direct Government farm payments are forecast at $16.5 billion in 2022, a $9.4 billion (36.3 percent) decrease from 2021 levels.”

Thursday’s update stated that, “Soybean receipts in 2022 are expected to increase by $14.5 billion (29.5 percent) relative to 2021, because of forecasted growth in both prices and quantities sold. Corn receipts are forecast to increase by $19.6 billion (27.6 percent) in 2022, due to higher expected 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 the COVID-19 pandemic. Payments in calendar year 2022 from these USDA programs are forecast at $1.2 billion compared with $23.5 billion and $7.5 billion in 2020 and 2021, respectively.”

“Other supplemental and ad hoc disaster assistance, which includes farm bill designated disaster programs, are forecast to be $10.7 billion in 2022, an increase of $7.8 billion from 2021, largely because of the recently passed Extending Government Funding and Delivering Emergency Assistance Act, which created the Emergency Relief Program (ERP) and the Emergency Livestock Relief Program (ELRP), and the assistance to distressed borrowers from the Inflation Reduction Act.”

“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 $635.4 million or 18.0 percent from 2021.”

ERS also explained that, “Farm bill commodity payments under the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs are forecast to decline by $1.9 billion, or 84 percent, in 2022 to $354 million.”

With respect to production expenses, ERS noted that, “Farm sector production expenses—including expenses associated with operator dwellings—are forecast to increase by $69.9 billion (18.8 percent) to reach $442.0 billion in calendar year 2022. This would represent the largest year-to-year dollar increase in nominal terms on record.”

More narrowly, ERS pointed out that, “Fertilizer-lime-soil conditioner expenses are forecast to increase by $13.9 billion (47.0 percent) to $43.4 billion in 2022.”

“Interest expenses (including operator dwellings) are also forecast to increase in 2022 by $8.0 billion (41.0 percent) to $27.4 billion.”