But total U.S. net farm income –the farmer’s paycheck, after expenses are factored in – will actually decline slightly this year. That’s because farm and ranch production expenses are also expected to reach an all-time high in 2022.
In a report released Sept. 1, USDA’s Economic Research Service is forecasting that cash receipts from crop and animal sales will total $525 billion in 2022. That is $92 billion, or 21 percent, higher than the 2021 total and would be an all-time record for farm cash receipts in the U.S.
But USDA is also forecasting that total farm and ranch production costs will rise dramatically this year.
At the same time, direct government payments to agricultural producers are expected to total $13 billion this year, which is a 50 percent decline compared with last year. That’s due mostly to much lower amounts of COVID-related assistance to producers.
When total farm revenue and various expenses are tallied up, U.S. net farm income in 2022 is expected to total $148 million, a year-over-year decline of less than 1 percent when adjusted for inflation.
That’s not bad news since total U.S. net farm income reached a record level of $140 billion in 2021.
Total farm and ranch production expenses in the U.S. are forecast to increase by $66 billion to $437 billion this year. That’s an 18 percent increase over 2021 or 11 percent when adjusted for inflation.
That $66 billion increase in farm expenses would be the largest one-year increase on record.
USDA-ERS is forecasting that all categories of major farm production expenses will be higher in 2022.
Fertilizer (up 52 percent compared with 2021) and fuels and oils (up 42 percent) have the highest increases, but other costs are also up significantly.
Interest expenses are forecast to be up 40 percent, pesticide costs are expected to rise 21 percent, feed costs are forecast to be up 15 percent, property taxes and fees are up 10 percent, labor up 9 percent, and net rent up 7 percent.
Total cash receipts from crops are forecast at $274 billion in 2022, which is 15 percent, or $36 billion, higher than 2021.
Total cash receipts from animals and animal products are forecast to rise by $55 billion, to $251 billion in calendar year 2022. That’s 28 percent higher than 2021.
That’s the U.S. forecast.
In Idaho, total farm-cash receipts and net farm income in 2022 could end up varying to some degree.
That’s because Idaho’s agricultural profile is different than the U.S. as a whole. While soybeans, corn and cotton are major crops in the United States, they are not in Idaho.
When it comes to farm-level revenue, Idaho’s main agricultural commodity is dairy, followed by cattle and calves, potatoes, wheat, hay, sugar beets and barley.
USDA forecasts that cash receipts from dairy operations will increase by 29 percent this year and it expects cash receipts from cattle and calves to rise by 10 percent.
USDA also forecasts cash receipts from wheat to increase by 26 percent in 2022.
When it comes to gross farm revenue in 2022, “Idaho is going to be a different story than the U.S. as a whole, for the better,” said University of Idaho Agricultural Economist Garth Taylor.
When it comes to total government payments declining by 50 percent, Taylor said that should have a very minor impact on Idaho agriculture because Idaho farmers and ranchers receive a very small portion of their income from them.
“We do not farm the government in Idaho,” he said. “We just do not get many of those payments.”
The USDA-ERS “Farm Income and Financial Forecasts” report, which was released Sept. 1, had good news when it comes to farmers’ balance sheets.
According to the report, 2022 will see the first decline in total U.S. farm debt since 2012, when adjusted for inflation. Farm bankruptcies in the U.S. are also expected to decline this year, to their lowest rate since 2004.
Total farm sector equity is forecast to increase by 10 percent, or $316 billion, in 2022, to $3.34 trillion.