USDA Forecasts Farm Sector Profits to Remain Above Average in 2022

When adjusted for inflation, 2022 net cash farm income is forecast to increase by $13.5 billion (8.7%) from 2021 and be at its highest level since 2012.
When adjusted for inflation, 2022 net cash farm income is forecast to increase by $13.5 billion (8.7%) from 2021 and be at its highest level since 2012.
(iStock)

USDA released its latest farm sector profit forecast on Thursday. According it's estimates, farmers may fare better than previous years in many 2022 balance sheet boxes.

Net Farm Income

Net income, a broad measure of profits, is forecast by USDA at $147.7 billion in calendar year 2022, an increase of $7.3 billion (5.2%) in 2022 relative to 2021.

The 2021 value is an increase of $45.9 billion (48.5%) relative to 2020. When prior years are adjusted for inflation, net farm income in 2021 was at its highest level since 2013.

USDA
Courtesy of USDA

Net farm income in 2022 would be $0.9 billion (0.6%) lower than in 2021 yet 42.1% above its 20-year average (2002–21) of $104.0 billion in inflation-adjusted dollars.

Net Cash Farm Income

USDA forecasts $168.5 billion in 2022, an increase of $22.1 billion (15.1%) relative to 2021. The 2021 value was $29.6 billion (25.4%) above 2020.

When adjusted for inflation, 2022 net cash farm income is forecast to increase by $13.5 billion (8.7%) from 2021 and be at its highest level since 2012.

Net cash farm income in 2022 would be 34.5% above its 2002–21 average of $125.3 billion. Net cash farm income encompasses cash receipts from farming as well as farm-related income (including government payments) minus cash expenses.

It does not include noncash items — including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings — reflected in the net farm income measure above.

Cash Receipts

From the sale of agricultural commodities, USDA forecasts cash receipts to increase by $91.7 billion (21.2%, in nominal terms) from 2021 levels to $525.3 billion in 2022.

Total crop receipts are expected to increase by $36.4 billion (15.3%) from their 2021 level following higher receipts for soybeans, corn, and wheat. Total animal/animal product receipts are expected to increase even more from the previous year, by $55.3 billion (28.3%), following increases in receipts for all categories of animal/animal products.

These increases would put total cash receipts in 2022 at their highest level on record, even after adjusting prior years for inflation.

Government Payments

While cash receipts overall are expected to increase in 2022, lower direct government payments and higher production expenses are expected to moderate income growth.

Direct government payments are forecast to fall by $12.8 billion (49.7%) from 2021 to $13.0 billion in 2022. The decrease is expected largely because of lower supplemental and ad hoc disaster assistance for COVID-19 relief in 2022 compared with 2021.

Total Production Expenses

This number, including operator dwelling expenses, are forecast to increase by $66.2 billion (17.8%) to $437.3 billion (in nominal terms) in 2022.

Spending on all categories of expenses is expected to rise with the largest increase in fertilizer-lime-soil conditioner expenditures, up 44%.

Average Net Cash Farm Income

USDA forecasts farm businesses to fall 3.3% from 2021 to $98,200 per farm in 2022 (in nominal terms). However, the regional average net cash farm income outlook is mixed.

For farm businesses located in the Northern Crescent region, average net cash farm income is forecast to increase in 2022, but it is forecast to decline for farm businesses in all other regions when adjusted for inflation.

Farm businesses specializing in dairy are expected to see the largest growth in average net cash farm income in 2022, while those specializing in wheat, cotton, and specialty crops are expected to see the largest declines in 2022.

Farm Sector Equity

Ag equity is expected to increase by $315.6 billion (10.4%) in 2022 to $3.34 trillion in nominal terms.

Farm sector assets are forecast to increase $337.5 billion (9.7%) in 2022 to $3.84 trillion following expected increases in the value of farm real estate assets.

Farm sector debt is forecast to increase by $21.9 billion (4.6%) in 2022 to $496.0 billion in nominal terms but it is forecast to fall by 1.2% when adjusted for inflation.

Debt-to-asset levels for the sector are forecast to improve from 13.56% in 2021 to 12.93% in 2022.

Working capital, which measures the amount of cash available to fund operating expenses after paying off debt due within 12 months, is forecast to fall by 2.6% in 2022.

For more details, visit USDA's site.

More on ag business:

Why You Need to Understand Adjusted Gross Income
USDA Doubles Down on Equipment Gains

 

Latest News

Sustainable California Initiative charts progress in ag sustainability and equity
Sustainable California Initiative charts progress in ag sustainability and equity

GrubMarket says its initiative made strides in 2023, including the planting of 100,000-plus trees and aiding farmers in organic transition.

Oppy hits the slopes with competitive skier partnership
Oppy hits the slopes with competitive skier partnership

Ski-cross athlete Emeline Bennett will share food tips, highlights and more through Oppy’s social media channels.

World Variety highlights combo pack of dragon fruit at AWG showcase
World Variety highlights combo pack of dragon fruit at AWG showcase

With more than 1,500 options among its offerings, World Variety Produce had plenty of options to highlight at the Associated Wholesale Grocers' seventh annual Innovation Showcase, March 25-26.

AgroFresh bolsters postharvest solutions with Pace International purchase
AgroFresh bolsters postharvest solutions with Pace International purchase

The company says the acquisition will expand its postharvest portfolio and that it plans to collaborate with Valent BioSciences to develop future products to boost produce freshness.

Wonderful Citrus highlights Organic Halos, Seedless Lemons
Wonderful Citrus highlights Organic Halos, Seedless Lemons

Wonderful also promoted its No Shells pistachios, including its new Jalapeño Lime flavor, at the Associated Wholesale Grocers' seventh annual Innovation Showcase.

NGA makes marketing hire, promotes government relations staffer
NGA makes marketing hire, promotes government relations staffer

The National Grocers Association has welcomed Caroline Sar as its manager of marketing and member engagement and promoted Max Wengroff to senior manager of government relations.