Highlights from the September 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, September 1, 2022.
Farm Sector Profits Forecast to Remain Above Average in 2022
Net farm income, a broad measure of profits, is forecast at $147.7 billion in calendar year 2022, an increase of $7.3 billion (5.2 percent) in 2022 relative to 2021. The 2021 value is an increase of $45.9 billion (48.5 percent) relative to 2020. When prior years are adjusted for inflation, net farm income in 2021 was at its highest level since 2013. Net farm income in 2022 would be $0.9 billion (0.6 percent) lower than in 2021 yet 42.1 percent above its 20-year average (2002–21) of $104.0 billion in inflation-adjusted dollars.
Net cash farm income is forecast at $168.5 billion in 2022, an increase of $22.1 billion (15.1 percent) relative to 2021. The 2021 value was $29.6 billion (25.4 percent) above 2020. When adjusted for inflation, 2022 net cash farm income is forecast to increase by $13.5 billion (8.7 percent) from 2021 and be at its highest level since 2012. Net cash farm income in 2022 would be 34.5 percent 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 are forecast to increase by $91.7 billion (21.2 percent, 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 percent) 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 percent), 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.
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 percent) 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. Meanwhile, total production expenses, including operator dwelling expenses, are forecast to increase by $66.2 billion (17.8 percent) 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 percent.
Average net cash farm income for farm businesses is forecast to fall 3.3 percent 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 is expected to increase by $315.6 billion (10.4 percent) in 2022 to $3.34 trillion in nominal terms. Farm sector assets are forecast to increase $337.5 billion (9.7 percent) 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 percent) in 2022 to $496.0 billion in nominal terms but it is forecast to fall by 1.2 percent when adjusted for inflation. Debt-to-asset levels for the sector are forecast to improve from 13.56 percent in 2021 to 12.93 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 fall by 2.6 percent in 2022.
Median Income of Farm Operator Households is Estimated to Rise in 2021 and Forecast to Decline in 2022 When Adjusted for Inflation
Median total farm household income is estimated to increase in calendar year 2021 to $92,250 and increase further to $93,663 in 2022. That is a nominal increase of 15.2 percent (a 10.6-percent increase after inflation) between 2020 and 2021 and a 1.5-percent nominal increase (a 4.1-percent decline after inflation) in 2022. The estimates for 2021 are preliminary and subject to change in the December 2022 release.
Farm households typically receive income from both farm and off-farm sources. Median farm income earned by farm households is estimated to increase in 2021 to $210 from -$1,198 in 2020, and then forecast to decline to -$986 in 2022. Many farm households primarily rely on off-farm income: median off-farm income in 2021 is estimated at $82,809, an increase of 22 percent from $67,873 in 2020, and to continue increasing by 6.3 percent to $88,034 in 2022. The increase in 2021 was mainly due to higher earned income—income from wages, salary, and nonfarm businesses—which rose 54 percent from $32,428 in 2020 to $50,000 in 2021. Unearned income—income from interest, investments, pension and retirement accounts, unemployment compensation and other public transfers—also increased by 7.2 percent between 2020 and 2021. 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.