Despite all the challenges the pandemic brought to 2020 and 2021, overall farm income ended up looking better than one might expect.
While the final USDA numbers for 2021 have not been published yet, the University of Wisconsin-Madison’s Paul Mitchell said that farm income for last year is predicted to be well above the 20-year average.
“2020 and 2021 actually look like they are going to turn out to be fine years in terms of farm income for the typical grower,” Mitchell said during a University of Wisconsin Division of Extension webinar titled “A farm-gate economic outlook.”
Farm income for 2021 was 19% over 2020 values, and it was up 24% over the 20-year average. Although Mitchell said revenue for dairy was relatively flat, corn, soybeans, beef, broilers, and hogs all had above average revenue for the year.
The real source of gains behind higher prices, though, was the large influx of cash that came in the form of government farm payments, he explained. However, farmers should not expect a repeat of this in the new year.
“I expect a major drop off of these payments in 2022,” Mitchell stated.
He said that will leave farms to make money “the old-fashioned way, by growing stuff and selling it for high prices.” While profitable prices are not always the reality, Mitchell believes prices for many commodities will be good in 2022 if markets continue on their current trajectory. The danger, though, is if markets are disrupted and farmers are still faced with high input costs.
“It’s a risk if the markets fall apart, you have to do something to put down a price floor,” he said, recommending that farms use crop insurance, other mitigation strategies, or marketing mechanisms to protect themselves from falling markets. However, he advised farms to not give up their upside, either.
“If we have a production issue – drought is on my mind with low soil moisture going into 2022 – and prices go up, don’t give up on the upside,” Mitchell said.