Net Farm Income in 2022 to Fall Sharply on Loss of Pandemic Aid
September 21, 2021
Despite higher prices, farm income is projected to drop $23 billion in 2022 because of a sharp decline forecast in federal government payments and higher input costs, according to the Food & Agricultural Policy Research Institute (FAPRI) at the University of Missouri.
FAPRI released its latest baseline last week for U.S. farm income and costs.
Projecting 2021 net farm income at $122 billion, FAPRI's forecast for 2021 is higher than USDA's Economic Research Service. If numbers hold through the end of the year, net farm income for 2021 will be the highest level since 2013, driven by a sharp increase in sales for crops and livestock products that more than offsets higher production expenses.
For 2022, FAPRI pegs net farm income at $99.3 billion, a $23 billion drop (18.8%) from net farm income for 2021. The difference effectively runs parallel to expected drops in federal subsidies created in response to the pandemic.
Total projected government spending on farm-related programs for FY 2021 comes in at a record $52 billion with spending under the Coronavirus Food Assistance Program (CFAP) Pandemic Assistance for Producers (PAP) and the Paycheck Protection Program (PPP) all helping drive higher aid to producers. If policies remain the same, federal aid will drop $30 billion in FY 2022 to $22 billion.
Looking at it from a calendar-year perspective, $28.2 billion in government payments for 2021 will drop by $22 billion to $6.2 billion in 2022 with conservation programs making up most of the payments, FAPRI stated.
Total cash receipts for sales in major crops and livestock will also decline about $3.3 billion (less than 1% overall) to $427.9 billion in 2022 after seeing a $74 billion spike in cash receipts (17.1%) from 2019 to 2020. Other than cattle and a slight increase in dairy sales, other major commodities are expected to see slight declines in cash receipts. After a price jump in 2021, swine cash receipts are expected to see a $3.59 billion drop in value, or a 12.3% drop.
While total cash receipts for 2021 are expected to drop slightly, production expenses are expected to increase $12.9 billion (3.2%) to an estimated $397.55 billion. Increases are projected for livestock, seed, fertilizer and chemicals, fuels and electricity, interest rates, labor, capital consumption and rent.
Even though net farm income is projected 18.8% lower for 2022, FAPRI projects out to 2026 and shows net farm income dropping lower in 2023 to $91 billion then some slight increases along the way to 2026.
For more on FAPRI's baseline, go to https://www.fapri.missouri.edu/….