Highlights from the December 2022 Farm Income Forecast
Suggested citation for linking to this discussion:
U.S. Department of Agriculture, Economic Research Service. Farm Sector Income & Finances: Highlights from the Farm Income Forecast, December 1, 2022.
Farm Sector Profits Forecast to Increase in 2022
Net farm income, a broad measure of profits, is forecast at $160.5 billion in calendar year 2022, an increase of $19.5 billion (13.8 percent) in 2022 relative to 2021. This follows an annual increase of $46.6 billion (49.3 percent), from $94.4 billion in 2020 to $141.0 billion in 2021. When prior years are adjusted for inflation, net farm income is forecast to increase $10.7 billion (7.2 percent) in 2022 relative to 2021 and be at its highest level since 1973. Net farm income in 2022 would be 53.3 percent above its 20-year average (2002–2021) of $104.7 billion in inflation-adjusted dollars.
Net cash farm income is forecast at $187.9 billion in 2022, an increase of $39.4 billion (26.5 percent) relative to 2021. This follows an annual increase of $31.7 billion (27.2 percent) in 2021. When adjusted for inflation, 2022 net cash farm income is forecast to increase by $30.1 billion (19.1 percent) from 2021 and be at its highest level since the USDA, Economic Research Service (ERS) inflation adjusted data series began in 1929. Net cash farm income in 2022 would be 48.8 percent above its 2002–2021 average of $126.3 billion. Net cash farm income encompasses cash receipts from farming as well as cash 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.
Cash receipts from the sale of agricultural commodities are forecast to increase by $105.7 billion (24.3 percent, in nominal terms) from 2021 levels to $541.5 billion in 2022. Total crop receipts are expected to increase by $45.5 billion (19.0 percent) from their 2021 level following higher receipts for many crops with large increases forecast for soybeans, corn, and wheat. Total animal/animal product receipts are expected to increase even more from the previous year, by $60.2 billion (30.8 percent), following increases in receipts for all categories of animal/animal products. These increases would put inflation-adjusted total cash receipts in 2022 at their highest level for the USDA farm income data series, dating back to 1929.
While cash receipts 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 $9.4 billion (36.3 percent) from 2021 to $16.5 billion in 2022. This decrease is expected largely because of lower supplemental and ad hoc disaster assistance for COVID-19 relief in 2022 relative to 2021. Meanwhile, total production expenses, including operator dwelling expenses, are forecast to increase by $69.9 billion (18.8 percent) to $442.0 billion (in nominal terms) in 2022. Spending on nearly all categories of expenses is expected to rise with the largest dollar increase projected for fertilizer-lime-soil conditioner expenditures at $13.9 billion (47.0 percent) compared with 2021.
Average net cash farm income for farm businesses is forecast to increase 8.9 percent from 2021 to $110,600 per farm in 2022 (in nominal terms). However, the regional average net cash farm income outlook is mixed. Of the 9 ERS Farm Resource Regions, 6 are expected to see an increase in average net cash farm income in 2022 compared with 2021, in nominal dollars. However, for farm businesses located in the Southern Seaboard, Fruitful Rim, and Eastern Uplands, average net cash farm income is forecast to decrease in 2022. Farm businesses specializing in dairy are expected to see the largest growth in average net cash farm income in 2022, while those specializing in specialty crops, cotton, and hogs are expected to see the largest declines in 2022.
Farm sector equity is expected to increase by $320.8 billion (10.6 percent) in 2022 to $3.34 trillion in nominal terms. Farm sector assets are forecast to increase $348.6 billion (10.0 percent) in 2022 to $3.85 trillion following expected increases in the value of farm real estate assets. Farm sector debt is forecast to increase by $27.8 billion (5.9 percent) in 2022 to $501.9 billion in nominal terms but it is forecast to fall by 0.4 percent when adjusted for inflation. Debt-to-asset levels for the sector are forecast to improve from 13.56 percent in 2021 to 13.05 percent 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 rise 4.7 percent in nominal dollars but fall by 1.4 percent when adjusted for inflation.
Median Income of Farm Operator Households is Forecast to Decline in 2022 When Adjusted for Inflation
Median total farm household income is forecast to increase in 2022 to $94,794 from $92,239 in 2021. That is a nominal increase of 2.8 percent (a 3.3 percent decline after inflation) between 2021 and 2022.
Farm households typically receive income from both farm and off-farm sources. Median farm income earned by farm households is estimated to decline in 2022 to -$661 from $210 in 2021. In recent years, around half of farm households had negative farm income each year. Many farm households primarily rely on off-farm income: median off-farm income in 2022 is forecasted at $88,140, an increase of 6.4 percent from $82,809 in 2021. The forecasted increase in median off-farm income from 2021 to 2022 is mainly due to expected increases (8.1 percent) in median unearned income—income from interest, investments, pension and retirement accounts, unemployment compensation and other public transfers. Earned income—income from wages, salary, and nonfarm businesses is also expected to increase by 4.9 percent. Since farm and off-farm income are not distributed identically for every farm, median total income will generally not equal the sum of median off-farm and median farm income.
See the Farm Household Income and Characteristics data product tables for financial statistics of farm operator households.
- Farm Sector Income and Finances for a discussion of the full farm sector income forecast.
- Farm Household Well-being for a discussion of the farm household income forecast.
- Farm Income and Wealth Statistics for the complete 2022 farm income forecast data and full history of U.S. and State farm sector estimates.
- Charts and Maps About Your State, Charts and Maps of U.S. Farm Sector Balance Sheet Data, and Charts and Maps of U.S. Farm Income Statement Data for farm sector data visualizations.
- Farm Household Income and Characteristics for data related to farm household income and characteristics.
- ARMS Farm Financial and Crop Production Practices data that underpin the farm income forecast and estimates.