YOUR TEXAS AGRICULTURE MINUTE

Forecasting 2022 net farm income

By Gary Joiner
Publisher

Net farm income for U.S. agriculture in 2021 was its highest level in eight years. A quick dive into the numbers explains why.

Rising commodity prices and strong worldwide demand helped fuel the rise in income. But so did government payments in the form of ad hoc disaster assistance. These programs were often linked to the pandemic. Twenty four percent of net farm income last year is associated with this assistance.

The American Farm Bureau Federation says the outlook for 2022 depends on a range of market issues.

Among them, will agricultural trade continue to grow? China is a big part of answering that question. Our country’s Phase One Agreement with China has ended. Whether the U.S.’ elevated agricultural trade with China continues beyond their Phase One commitments remains to be seen.

And then there’s the dramatic rise in the cost of inputs. High fertilizer prices, increasing more than 300% in some areas, and increased prices of other inputs—like crop protection chemicals and land values, which increased 7% in 2021 compared to 2020—are tightening what could have been above breakeven profit margins.

There are also labor and transportation concerns that could increase costs. And it’s also uncertain whether more pandemic-related assistance might be made available.

It all adds up to likely less net farm income for U.S. agriculture than a year ago.

The preceding commentary is brought to you by Texas Farm Bureau, the “Voice of Texas Agriculture.” Called “Your Texas Agriculture Minute,” TFB will issue thought-provoking editorials each week—via print and audio—to spark understanding of agriculture in the Lone Star State and its impact on each and every Texan.

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