Farm income in the United States is expected to decrease by 4.5% (5.4 billion dollars) this year to $113.7 billion. However, this is still 15.2% above the 20-year average. Although both revenue in monetary terms and produced quantities are rising sharply, the ultimate income declines slightly due to reduced government subsidies, higher expenses, and inflation.
Net cash farm income, which better tracks the income and expenses of the agricultural sector, is expected to increase by 1.4% (136.1 billion dollars), which is 13.6% above the 20-year average. But adjusted for inflation, farmers' incomes will decline by 2.1%, mainly due to high production costs and the gradual elimination of government subsidies for COVID-pandemic aid, the U.S. Department of Agriculture (USDA) reported on Friday.
Net cash farm income is based on cash receipts from farming, plus government payments and other farm-related income, minus cash expenses. Net farm income also accounts for depreciation and changes in inventory values.
Crop receipts are expected to rise by 5.1%, while income from dairy, livestock, and poultry is expected to increase by 8.9%. Direct government payments will decline from 15.5 billion dollars (in 2021) to 11.7 billion dollars in 2022, the lowest amount since 2015.
Emergency aid for the coronavirus and other forms of ad-hoc assistance are expected to fall from 19.8 billion dollars in 2021 to 6.2 billion dollars this year. Meanwhile, production costs are expected to increase by 5.1%.
Just fertilizer prices alone are expected to be 12% higher this year. Livestock and poultry farmers are paying 6.1% more for feed. Labor costs for hired personnel are expected to rise by just under 6%.