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U OF ILLINOIS, OHIO STATE AG ECONOMISTS ISSUE REPORT "GRAIN FARM INCOME PROJECTIONS FOR 2022 AND 2023"


By Gary Schnitkey, Nick Paulson, and Jim Baltz, Department of Agricultural and Consumer Economics, University of Illinois and Carl Zulauf, Department of Agricultural, Environmental and Development Economics, Ohio State University

Grain farm incomes have been above average in 2020 and 2021 and are projected to remain above average in 2022. For 2023, projections are for lower incomes because of higher costs and projected lower grain prices. Much uncertainty exists about 2023. Farmers have built equipment and financial reserves to withstand low incomes that will inevitably happen sometime in the future.

Grain Farm Income History

Figure 1 shows the average net income on Illinois grain farms enrolled in Illinois Farm Business Farm Management (FBFM), a cooperative education and farm record-keeping service operated in Illinois. Each year's income is the average of those farms whose income comes predominately from grain operations. Average farm size and tenure have changed over time as farms have grown. In 2020, the average farm size was 1,300 tillable acres, with 23% of the farmland owned.

Net farm incomes were at high levels in 2020 and 2021. In 2020, the average farm income was $225,000 per farm, the third highest average income, only exceeded by $274,000 in 2011 and $298,000 in 2012. Net farm income in 2021 was $446,000, a record level. Higher 2020 and 2021 incomes stood in contrast to average incomes from 2014 to 2019, when net incomes averaged $78,000 per farm.

Grain farm income in 2021 was high primarily because of above-trend yields and historically high grain prices. In 2021, Illinois farmers averaged $5.90 per bushel for corn and $13.40 for soybeans. Both 2021 corn and soybean prices were well above averages from 2014 to 2020: $3.65 for corn and $9.64 for soybeans. In addition, government payments were small in 2021. Costs had begun to rise, but many farmers had yet to experience a significant increase in fertilizer and other expenses in 2021.

Grain Farm Projections for 2022 and 2023

The projected 2022 average income is $350,000 per farm, $96,000 lower than the 2021 level. Prices used in 2022 projections are $6.40 for corn and $14.00 for soybeans. Those 2022 prices are well above the 2021 actual prices:

The $6.40 corn price for 2022 is $.50 higher than the $5.90 price for 2021 and

The $14.00 soybean price is $.60 higher than the $13.40 price for 2021.

Higher commodity prices were more than offset by cost increases. From 2021 to 2022, non-land costs have increased by over $120 per acre for corn and $100 per acre for soybeans (see Figure 1 of farmdoc daily, August 2, 2022).

For 2023, incomes are projected at $81,000 per farm, a projection close to the 2014-2019 average of $78,000 per farm. Yields in 2023 are trend estimates. Costs are projected to continue to increase. Prices used in projections are $5.50 per bushel for corn and $13.00 per bushel for soybeans, still high by historical standards, but lower than 2022 prices. Given the higher cost structure, prices above $5.00 per bushel for corn and $12.00 for soybeans are now needed to break even (farmdoc daily, December 21, 2021).

To read entire report, Click Here


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