Earlier this month, the U.S. Department of Agriculture (USDA) released its 2022 Farm Sector Income Forecast, which showed a mixed bag for the farm economy. USDA’s Economic Research Service predicts that producer cash receipts will increase 21 percent to more than $525 billion nationally. Crop values are expected to increase nine percent year-over-year, while cash receipts from animal production will be up 28 percent from 2021 numbers.
Despite elevated commodity prices, farmers are not expected to report record paychecks, with farm income off by roughly 30 percent. University of Idaho ag economist Garth Taylor said the drop in income is thanks to a host of domestic and international issues, from drought to input costs to the war in Ukraine, and a variety of other challenges.
“But despite all of those headwinds, farmers were very high to a high on their cash receipts,” Taylor said. “They can overcome those things with higher prices, but it’s inflation that’s nailing farmers. It did it in the 1980s, and it’s threatening farms right now. And that bottom line is something we’ve really got to watch.”
When it comes to eating away at the bottom line, Taylor noted that fertilizer prices are up a projected 52 percent this year, fuel is up 42 percent and interest payments jumped 40 percent. Taylor said another factor pushing farm income lower is the reduction- or in many cases, the removal- of government payments farmers saw in 2020 and 2021.
“We’ll be back to where we’re depending on the revenues that farmers can generate from cash receipts,” Taylor said. “That component [government payments] is going to be largely gone from Idaho and it’s going to be largely gone from U.S. farmers.”
Click here for the full 2022 Farm Sector Income Forecast.