Higher commodity prices are contributing to a sharp increase in U.S. net farm income in 2021. However, under current policies, farm income could drop again in 2022 as government payments decline and production expenses rise. That’s according to the September University of Missouri Food and Agricultural Policy Research Institute September baseline report.
In 2022, FAPRI predicts net farm income declines by $23 billion, and net cash income falls even more sharply. Reduced government payments and higher production expenses explain the decline, as there is little net change in farm receipts. In later years, projected net farm income remains fairly steady in nominal terms at just under $100 billion each year. Rising asset values and slower growth in debt reduces the sector’s debt-to-asset ratio in 2021 and 2022, temporarily reversing the trend of previous years. Lower projected farm income can halt the rise in farm real estate values in 2023, and the debt-to-asset ratio again begins to increase.