U.S. farm income expected to fall as costs for fertilizer, other production expenses climb sharply


Donnelle Eller, Des Moines Register
Sun, February 6, 2022,

Iowa and U.S. farmers can expect income from crops and livestock production to tumble, with costs spiking and government payments falling, the U.S. Department of Agriculture says in a forecast for 2022.

Agriculture department economist Carrie Litkowski said the agency expects U.S. farm income to fall to $113.7 billion, down $9.7 billion, or 7.9%, from 2021. Last year's farm income hit the highest level since 2016, with corn and soybean prices closing in on record highs set in 2012 and 2013.

Farming is a significant economic driver in Iowa, which leads the nation in corn, hog and egg production, and is second to Illinois in soybean production. Agriculture ripples through the state's economy, with ties to equipment manufacturing, insurance, seed and renewable fuel production — another category Iowa leads.

Randy Miller, a farmer from Lacona, harvests soybeans from one of his fields last fall.

The state ranks second only to California when it comes to the size of its farm economy.

Lance Lillibridge, president of the Iowa Corn Growers board, said he believes U.S. farm income will be lower this year than the agriculture department predicts in its forecast, released Friday, with production costs exploding.

"I think incomes will be significantly in the red," said Lillibridge, who grows corn and soybeans and raises cattle near Cedar Rapids.

The agriculture department expects the costs to raise crops and livestock will grow 5.1% to $411.6 billion over the 2021 figure, with the price of fertilizer climbing 12% and for livestock feed, 6.1%. This year's expected hike in expenses comes on top of a 9.4% increase last year, the forecast said.

Lillibridge, however, said the increases he's seeing are far greater. He said his fertilizer costs are up 300% and the costs of herbicides, pesticides and other crop protection products are up 100% to 150%.

"It makes you want to throw up," he said, adding that he expects his fertilizer costs will be $190,000 more than last year's by the time the season ends.

The forecast said soybean growers should expect to get 8.9% more when they sell their crops this year, and corn growers should receive 4.8% more, with both increases primarily due to larger quantities sold.

Cash receipts for soybean are expected to hit a record high, Litkowski said.

Cash receipts for dairy producers are expected to be 22.1% higher, the forecast said, and 8.5% higher for calf and cattle operators, both based on strong price growth.

Hog producers can expect to get 10.3% less for their animals this year, coming off strong prices in 2021, Litkowski said.

Randy Miller, a farmer from Lacona, harvests soybeans from one of his fields last fall.

While the prediction of improved prices for cattle is encouraging, Lillibridge said, receipts probably won't keep pace with increased costs.

More: Iowa farmers get big break with good harvest, high prices. But will their luck hold?

Farmers have a lot on their minds going into the next growing seasons, he said. In addition to higher production costs, Iowa farmers are concerned about whether they'll have equipment and parts next season, given supply-chain issues, and remain concerned about the possibility of a drought.

More: Competition is fierce for Iowa's used farm equipment, attracting bidders from across the world

Iowa and large parts of the Midwest struggled with drought conditions last year. Many farmers said they received rain just in time to preserve crop yields.

The latest U.S. Drought Monitor report, released Thursday, showed almost 55% of Iowa experiencing abnormally dry or moderate drought conditions in the week ending Feb. 1. That was up from about 52% the previous week and about 48% a year ago.

"It probably wouldn't take much for us to drop back into a drought," Lillibridge said.

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com 

This article originally appeared on Des Moines Register: 2022 US farm income is expected to fall 7.9%, as production costs rise