Despite pandemic disruptions, U.S. farm income, a broad measure of profits, will be the highest since 2013, thanks to strong prices for corn, soybeans, wheat, broiler chicken, livestock and pork this year, the USDA said Wednesday. “It’s mostly a pricing story,” USDA economist Carrie Litkowski said.
Corn, wheat and soybean receipts are said to be 36% higher than last year, almost entirely due to higher market prices, the USDA said in its final revenue forecast for the year. Broiler chicken recipes are forecast to increase 49% from 2020, boosted by a recovery in prices.
Overall, net farm income of $ 116.3 billion this year would be almost double the total of 2016, when the agriculture sector struggled with low prices following the collapse of the commodity boom. based.
This year’s dynamic $ 64.7 billion increase in cash receipts will lead to a $ 29.8 billion increase in production spending and a $ 18.5 billion decrease in federal payments to increase farm income by $ 22 billion, or 23%, from 2020, a 20% increase from 2019, the USDA said.
Producers received a record $ 45.7 billion in direct government payments in 2020, or 48% of their income. This year, federal direct payments would total $ 27.2 billion, or 23% of revenues.
Farm incomes could decline sharply in 2022 with the end of pandemic relief and a continued increase in production spending, the FAPRI think tank said in September.
Many analysts expect commodity prices to weaken somewhat in 2022, which could reduce crop and livestock receipts. The USDA will make its first estimate of farm income for the new year on February 4.
“Input costs have increased dramatically in recent months, which is likely to increase credit needs and weigh on [farmers’] profit margins going forward, ”the Federal Reserve Bank of Kansas City said Wednesday.
Fertilizer prices have skyrocketed this fall and are expected to remain high “for at least the next six months and through the spring 2022 agronomic season,” Denver-based agricultural lender CoBank said. “Nitrogen production shocks, tight global supplies, rising natural gas input costs and sustained demand are pushing up prices.”
Almost all categories of farm spending have increased this year, the USDA said.
Production expenses were estimated at $ 387.6 billion, 8% higher than last year and close to the record high of $ 391 billion set in 2014. Fuel and oil expenses climbed by 32%, livestock feed expenses increased by 13% and the cost of fertilizers and other soils. conditioners are up 12.5%.
“The [agricultural] balance sheet is strong and remains strong, ”Litkowski said in a webinar. The debt ratio, a commonly used indicator of financial stress, is virtually unchanged from a year ago at 13.9%. Farm assets and debts have increased slightly this year. Bankruptcy rates are expected to drop.
The value of cropland has increased an average of 15% in the Midwest and Plains, according to agricultural bankers surveyed by regional Federal Reserve banks in Chicago, Kansas City, Minneapolis and Dallas.
The largest increases were 28% in Iowa, 26% in Minnesota and 23% in South Dakota, according to a summary. High commodity prices have encouraged farmers to expand their activities.
“By supporting agricultural real estate markets, interest rates on agricultural loans have remained historically low,” the summary said.
The USDA Farm Income Forecast is available here.