2022 Net Farm Income Could Top $8 Billion Again
Projections show net farm income in Nebraska will again top $8 billion in 2022. This would mark the second consecutive year net farm income topped $8 billion. The projection is a collaborative effort between the Center for Agricultural Profitability at the University of Nebraska and the Rural and Farm Finance Policy Analysis Center at the University of Missouri. It can be found at: https://cap.unl.edu/farm-income.
Figure 1 provides the details of the 2022 net farm income forecast. Beginning on the left with last year’s net farm income, growth in crop and livestock receipts of $2.3 billion and $2.4 billion this year are added. Higher commodity prices this year are expected to result in larger corn and soybean receipts and offset yield reductions resulting from drought. The drought is also expected to result in larger indemnification payments from crop insurance.
On the other side of the ledger, higher expenses, up $3.2 billion, less government payments, down $900 million, and other changes subtract from the increased revenues. Feed costs, $1.2 billion higher, and fertilizer expenses, $1 billion higher, drive the cost increases. The increased costs and other factors offset the revenue growth to result in a net income forecast about the same as 2021, although slightly lower.
Farmers are still in the midst of harvest, so this year’s crop production numbers remain unknown. And uncertainties abound in the U.S. and global economies, the conflict in Ukraine, and Chinese demand. Clearly the volatility in agriculture has ratcheted up over the past few years. All this is to say that while forecasts do provide a sense of the state of the farm economy, they are fraught with uncertainty. The positive news from these most recent forecasts, though, is that Nebraska producers remain on solid financial footing.
Figure 1. Changes in Components of Net Farm Income
Source: Baltsbarger, B., Lubben, B., Brunkow, T., Dennis, E,. McClure, G., Parsons, J., Thompson, E., Van Tassell, L. & C. Walters. September 2022. Fall 2022 Nebraska Farm Income Outlook. RaFF Report #02-202