The USDA says it expects farm income for 2022 to rise 5.2%, to $147.7 billion, from a year earlier, with cash receipts for agricultural commodities at a record level. But higher production expenses and lower government Covid-19 payments are potential headwinds.
The slight bounce in income comes after 2021, when farm income shot up $45.9 billion, or more than 48%, to the highest inflation-adjusted level since 2013. If 2022 income were adjusted for inflation — now at the highest level in decades — it would have declined 0.9 % from 2021 levels.
Net cash farm income is forecast at $168.5 billion in 2022, an increase of $22.1 billion, or 15.1 %, relative to 2021. Net cash farm income includes cash receipts from farming as well as farm-related income, such as government payments, minus expenses. It does not include non-cash items — changes in inventories, economic depreciation, and rental income — reflected in net farm income.
Cash receipts from the sale of agricultural commodities are forecast to increase $91.7 billion, or 21.2%, from 2021 levels to $525.3 billion in 2022, reflecting high prices for corn, soybeans and wheat. Total animal and animal product cash receipts are expected to rise 28.3%, following increases in all categories. These increases would put total cash receipts in 2022 at their highest level on record, even after adjusting for inflation.
Even with this growth in cash receipts, lower direct government payments and higher production expenses are expected to moderate overall income growth. Direct government payments are forecast to fall $12.8 billion, or nearly 50 percent, from 2021, to $13 billion in 2022, reflecting lower supplemental and disaster assistance for Covid-19.
Production expenses are forecast to increase $66.2 billion, or 17.8%, to $437.3 billion in 2022. Spending on all categories is expected to rise, with the largest increase in fertilizer-lime-soil conditioner expenditures up 44%.
According to the Federal Reserve, high commodity prices have been fueling a strong farm economy in the Midwest and Plains this summer.
Editor’s Take:
Recently, we reported in the AIR that 2021 farm income was at record levels. That was then and now USDA is forecasting that farm income in 2022 will be even higher. This is further substantiation of our belief that farmers/ranchers will be your best customers in the coming months. Despite concerns over rising input costs going forward, the fact is they will be flush with cash at the end of 2022 and hot on the trail for ways to legally reduce their tax burden. Leasing or purchasing a new truck or SUV (or maybe two or three) is certainly one avenue for them to accomplish that goal.
In addition, to the extent of concern about rising input costs, you have the perfect anecdote in AgPack. With potential exclusive rebates and discounts worth up to $30,000 on many products they already use or need, how can you miss? Get the word about you being a CAD member and your AgPack offerings out to farmers/ranchers in your area today. What better way to accomplish that than using AgTruckTrader.com!
