Net farm income, a broad measure of profits, is forecast to decrease by $5.4 billion (4.5 percent) from 2021 to $113.7 billion in 2022. This expected increase follows a forecast increase of $23.9 billion (25.1 percent) in 2021. Net cash farm income is forecast to increase by $1.9 billion (1.4 percent) to $136.1 billion in 2022, after a forecast increase of $17.0 billion (14.5 percent) in 2021. In inflation-adjusted dollars, 2022 net farm income is forecast to decrease by $9.7 billion (7.9 percent); net cash farm income is forecast to decrease by $2.9 billion (2.1 percent). If realized, net farm income and net cash farm income in 2022 would remain above their 2001–20 average (in real terms).
Growth in Crop Receipts Forecast for 2022
Crop cash receipts are forecast at $248.6 billion in 2022, an increase of $12.0 billion (5.1 percent) from the forecast for 2021 in nominal terms. Growth in receipts for corn, soybeans, wheat, and cotton are forecast to account for almost all of the net increase, while receipts are expected to fall for fruits and nuts.
Corn receipts are forecast to increase by $3.4 billion (4.8 percent) in 2022, resulting from higher quantities sold. Soybean receipts in 2022 are expected to increase $4.6 billion (8.9 percent), as forecasted growth in quantities sold should outweigh effects of lower prices. Cotton receipts are forecast to increase by $2.5 billion (33.8 percent), driven by growth in both prices and quantities sold. Expected growth in quantities sold should result in a gain in wheat receipts; they are forecast $1.2 billion (10.6 percent) higher in 2022.
Vegetable and melon cash receipts are expected to grow by $0.4 billion (2.5 percent) in 2022, as higher forecasted prices should outweigh a decline in quantities sold. This increase includes a rise of $0.2 billion (6.1 percent) in potato receipts. Cash receipts for fruits and nuts are expected to fall $1.2 billion (4.8 percent) in 2022, as the effects of falling prices should be larger than growth in quantities sold.
Animal/Animal Product Receipts Forecast to Increase in 2022
Total animal/animal product cash receipts are expected to increase $17.4 billion (8.9 percent in nominal terms) to $213.3 billion in 2022. Growth in receipts is forecast for milk, cattle and calves, and broilers, while hog receipts are expected to decline.
Milk receipts are expected to increase $9.3 billion (22.1 percent) in 2022, mostly due to expectations for strong price growth. Similarly, forecasted higher prices should drive an increase of $6.2 billion (8.5 percent) in receipts for cattle and calves. Lower prices are expected to result in a decline of $2.8 billion (10.3 percent) in hog cash receipts in 2022.
Broiler receipts are expected to increase $4.0 billion (12.3 percent) in 2022, mostly due to higher expected prices. Receipts for turkeys and chicken egg cash receipts are each forecast to increase 3 percent in 2022 relative to 2021 in nominal terms but fall when adjusted for inflation.
Expected Growth in Prices and Quantities Sold Raise 2022 Cash Receipts Forecast
To better understand the factors underlying the forecast change in annual receipts from 2021 to 2022, we separate the change into two distinct effects: a “price effect” where we project the change in cash receipts associated with holding the quantity sold constant at 2021 levels and allowing prices to change to forecast 2022 levels, and a “quantity effect” where prices are held constant from 2021 and quantities change to forecast 2022 levels. In 2022, both increasing prices and quantities sold are expected to have positive effects on cash receipts. Overall, crop and livestock sector cash receipts are forecast to increase $29.3 billion in 2022, with an estimated positive price effect of $14.3 billion, and a projected positive quantity effect of $14.0 billion. In addition, an upward shift of $1.1 billion is from forecasts for commodities whose price and quantity effects cannot be separately determined. As discussed above, we do find divergence in these effects by commodity group. Price effects on cash receipts for livestock commodities are positive, while quantity effects are slightly negative. Conversely, quantity effects on cash receipts for crops are positive, while price effects are negative.
Direct Government Farm Payments Forecast to Decrease in 2022
Direct Government farm program payments are those made by the Federal Government to farmers and ranchers with no intermediaries. Typically, most direct payments to farmers and ranchers are administered by the USDA under the Farm Bill or other authorities. Direct payments can also be from ad hoc and supplemental programs authorized by Congress. Government payments do not include Federal Crop Insurance Corporation (FCIC) indemnity payments (listed as a separate component of farm income) and USDA loans (listed as a liability in the farm sector’s balance sheet). After reaching a record high of $45.7 billion in 2020, direct Government farm program payments are forecast to decrease to $27.1 billion in 2021 and to decrease further to $11.7 billion in 2022. This overall decrease in 2021 and 2022 reflects lower anticipated payments from supplemental and ad hoc disaster assistance, mainly direct payments from COVID-19-related assistance programs.
Production Expenses Forecast to Increase in 2022
Farm sector production expenses—including expenses associated with operator dwellings—are forecast to increase by $20.1 billion (5.1 percent) to reach $411.6 billion in 2022. This follows a 9.4 percent increase in nominal expenses in 2021. If these forecasts are realized, 2022 production expenses would be the highest since 2015 yet still 11.1 percent below the 2014 peak in inflation-adjusted terms.
Nearly all expense categories are forecast to rise during the year, with the most significant increases in nominal terms for the following categories:
- Feed expenses, the largest single expense category, are forecast to increase in 2022 by $3.9 billion (6.1 percent) in nominal terms to $68.9 billion because of higher prices for feed commodities.
- Fertilizer-lime-soil conditioner expenses are forecast to increase by $3.4 billion (12.0 percent) in nominal terms to $31.9 billion.
Among the main expense categories, seed expenses are expected to remain unchanged, while the net rent to landlords is expected to decline by $1.2 billion (6.6 percent) to $17.6 billion, in nominal terms.