While this year is forecast not to exceed the farm profits of 2021, it should still be well above average.
U.S. net farm income, a broad measure of farm profitability, is currently forecasted at $113.7 billion, down 4.5%, according to USDA’s most recent Farm Sector Income Forecast, released Feb. 4.
That is 15% above the 2001-2020 average of $98.7 billion when adjusted for inflation.
“The outlook for agricultural economy in the United States remains solid,” says Cortney Cowley, economist for the Federal Reserve Bank of Kansas City. “But a sharp increase in production costs is weighing on expectations for 2022.”
$113.7 billion: Net farm income, a broad measure of farm profitability, is currently forecasted at $113.7 billion, down 4.5%, or $5.4 billion, from 2021. If realized, this would represent the first drop in net farm income after two consecutive years of gains.
3.5%: For 2022, the rate of return on assets is projected at less than 3.5%. The rate of return in agriculture has been less than 6% for eight consecutive years and is in stark contrast to the 10%-to-16% returns experienced from 2010 to 2012.
57%: Direct government payments are forecast to decrease by $15.5 billion, a whopping 57%, between 2021 and 2022.
$20.1 billion: Production expenses, including operator dwelling expenses, are forecasted to increase by $20.1 billion, or 5%, reaching $411.6 billion in 2022, the highest production costs farmers have ever faced.
$467.4 billion: During 2022, U.S. farm sector debt is projected to increase $13 billion, or nearly 3%, to a record $467.4 billion.
$311.9 billion: Nearly 67% of farm debt is in the form of real estate debt, as for the land to grow crops and raise livestock. Real estate debt is projected to increase $10.2 billion to a record-high $311.9 billion, largely due to an increase in land values across the country.
14%: USDA expects the debt-to-asset ratio to be over 14% for 2022, which would be the highest since 2002, meaning farmers have increased their borrowing.
$93 billion: Working capital is projected to fall by $3.1 billion, or 3.3%, to $93 billion, which is the first decline since 2016.
$88,234: Median total farm household income is forecast to be relatively flat in 2021 at $83,311 and increase to $88,234 in 2022.
Crowley spoke at USDA’s 2022 Agricultural Outlook Forum this week. Read more coverage:
USDA Anticipates 92 Million Acres of Corn, 88 Million Acres of Soybeans
