Based on Illinois Farm Business Farm Management Association (FBFM) records, average farm operator returns for labor and management on 2,053 Illinois farms was higher for all geographic areas in the state in 2021 compared to 2020 and above the average for the last five years.
Higher corn and soybean yields, along with higher grain prices, were the main reasons for the increased incomes, because they more than offset higher costs. Hog and beef returns increased with higher prices received while returns to dairy enterprises were lower due to increased feed costs with stable milk prices.
Farm earnings were highest in the southern areas of the state. Earnings were lowest in the central part of the state.
The average return to the operator's labor and management income in 2021 was $374,403. This figure can be thought of as the farmer's "wage" or "salary". This is what remains from the operator's net farm income after a fair return to the operator's equity in machinery and land has been subtracted.
The 2021 returns were $185,562 above the 2020 average of $188,841 and $246,206 above the average for the last five years. Operator's labor and management income ranged from about $309,500 in the central part of Illinois to over $430,000 in southern Illinois. The 2021 earnings are the highest for any year during the last ten years. Labor and management incomes have varied greatly during the last ten years, ranging from a low of negative $67,198 in 2015 to the high of $374,403 in 2021.
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Editor’s Take:
As you may recall, practically every week in the AIR, we mention that farmers are doing well and have money to spend. While this is a report on one major ag state, we have every reason to believe that figures in virtually every state would demonstrate a similar pattern. Our belief is based on the fact that nationally net farm income in 2021 was roughly $135 billion and that was up significantly from 2020. While 2022 net farm income is expected to decrease slightly, economists forecast 4.5% to 5.1%, farmers/ranchers will still put plenty of cash in the bank. They will be looking for tax advantages by purchasing new equipment, buildings and, yes, trucks! Other customers may be feeling more of a pinch, but farmers/ranchers should definitely be at or near the top of your prospect list.
