Highlights from the February 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, February 4, 2022.
Farm Sector Profits Forecast to Remain Above Average in 2022
Net farm income, a broad measure of profits, is forecast to have increased by $23.9 billion (25.1 percent) in 2021 relative to 2020 and is forecast to decrease by $5.4 billion (4.5 percent) in 2022 relative to 2021. Forecast at $113.7 billion in 2022, net farm income would be 15.2 percent above its 2001–20 average of $98.7 billion when prior years are adjusted for inflation. In inflation-adjusted 2022 dollars, net farm income is forecast to decrease by $9.7 billion (7.9 percent) in 2022 from 2021.
Net cash farm income is forecast to have increased by $17.0 billion (14.5 percent) in 2021 relative to 2020 and is forecast to increase by $1.9 billion (1.4 percent) to $136.1 billion in 2022 relative to 2021. When adjusted for inflation, 2022 net cash farm income is forecast to decrease by $2.9 billion (2.1 percent) from 2021. Net cash farm income in 2022 would be 13.6 percent above its 2001–20 average of $119.8 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 $29.3 billion (6.8 percent, in nominal terms) from 2021 levels to $461.9 billion in 2022. Total crop receipts are expected to increase by $12.0 billion (5.1 percent) from their 2021 level following higher receipts for soybeans, corn, cotton, and wheat. Total animal/animal product receipts are expected to increase even more, by $17.4 billion (8.9 percent), following higher receipts for milk, cattle/calves, and broilers.
While 2022 cash receipts overall are expected to increase, lower direct Government payments and higher production expenses are expected to counteract their net effects. Direct Government payments are forecast to fall by $15.5 billion (57 percent) from 2021 to $11.7 billion in 2022. The decrease is expected 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 $20.1 billion (5.1 percent) to $411.6 billion (in nominal terms) in 2022. Spending on nearly all categories of expenses is expected to rise with large increases in feed and fertilizer-lime-soil conditioner expenditures.
Average net cash farm income for farm businesses is forecast to remain relatively unchanged from 2021 at $91,500 per farm in 2022. However, the regional average net cash farm income outlook is mixed. For farm businesses located in the Northern Crescent and Eastern Uplands regions, average net cash farm income is forecast to increase in 2022, but it is forecast to decline for farm businesses located in the Basin and Range, Fruitful Rim and Mississippi Portal regions. For all other regions, average net cash farm income is forecast to be relatively stable in 2022. Farm businesses specializing in cotton and dairy are expected to see the largest growth in average net cash farm income in 2022, while those specializing in specialty crops and hogs are expected to see the largest declines in 2022.
Farm sector equity is forecast up by $29.1 billion (1 percent) to $2.85 trillion (in nominal terms) in 2022. Farm assets are forecast to increase by $42.2 billion (1.3 percent) to $3.31 trillion in 2022, largely reflecting anticipated increases in real estate value. When adjusted for inflation, equity and total assets are forecast to fall by 2.5 and 2.2 percent respectively. Total farm debt is forecast to increase by $13.1 billion (2.9 percent) to $467.4 billion (in nominal terms) but decline 0.7 percent when adjusted for inflation. The farm sector debt-to-asset ratio is forecast to increase from 13.89 percent in 2021 to 14.11 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 decrease by 3.3 percent in 2022 from 2021.
Median Income of Farm Operator Households Forecast to be Flat in 2021 and Rise in 2022
Median total farm household income is forecast to be relatively flat in 2021 at $83,311 and increase to $88,234 in 2022. That is a nominal increase of 4.1 percent (a 0.1 percent decline after inflation) between 2020 and 2021, and a 5.9 percent nominal increase (a 2.2 percent increase after inflation) in 2022.
Farm households typically receive income from both farm and off-farm sources. Median farm income earned by farm households is forecast to decrease in 2021 to -$1,344 from -$1,198 in 2020, and then forecast to decline further to -$1,385 in 2022. Many farm households primarily rely on off-farm income: median off-farm income in 2021 is forecast at $71,234, an increase of 5.0 percent from $67,873 in 2020, and to continue increasing by 4.4 percent to $74,354 in 2022. This increase is due to higher earned income—income from wages, salary, and nonfarm businesses—and higher unearned income—income from interest, investments, pension and retirement accounts, unemployment compensation and other public transfers. 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.