Baseline update for Missouri farm income

ABSTRACT

An increase in farm commodity prices contributes to projected record farm cash receipts and net farm income in Missouri in 2021. A drop in government payments and rising production expenses could dampen the outlook for farm finances in 2022, but projected net farm income remains above the 2020 level for the next several years. The projections in this report update March 2021 estimates of Missouri agricultural markets and farm income. This report incorporates projections for US. agricultural markets included in the FAPRI-MU update published in early September 2021 FAPRI-MU Report 404-21, available at htips//www.faprimissouri.edu/publicationfaugast-2021-baseline-outlook-update/. The US. market update reflected information available in August 2021, including USDA production estimates of 2021 crop production and July 2021 macroeconomic forecasts from HIS Markit. Historical Missouri farm income data used in this report are from USDA's Economic Research Service, including estimates of 2020 Missouri farm income released on September 2, 2021. Key results of the projections for Missouri agricultural markets and farm income include - Sharply higher prices for corn, soybeans, hogs and other farm commodities result in a $2.0 billion increase in Missouri crop cash receipts in 2021 and a $0.9 billion increase in livestock sector receipts. - Higher production expenses and reduced government payments offset part of the increase in cash receipts. Net farm income increases by $1.3 billion in 2021 over 2020, to a record $4.5 billion. - Projected Missouri crop acreage in 2022 is relatively stable. Crop receipts increase slightly in 2022 as farmers complete marketings of crops produced in 2021, but then fall back as prices for corn, soybeans and other crops moderate. - Livestock sector cash receipts dip in 2022, as projected declines in hog prices and receipts more than offset slightly higher cattle prices and receipts. In later years, modest projected increases in livestock sector production and higher cattle prices contribute to a slow increase in livestock sector cash receipts. - Direct government payments to Missouri farmers peaked at $1.5 billion in 2020, primarily because of temporary, ad hoc programs such as the Coronavirus Food Assistance Program (CFAP) and the Paycheck Protection Program (PPP). Projected payments decline in 2021, but remain large by historical standards. - This current-policy baseline does not assume any new ad hoc assistance programs beyond those announced by Au-gust 2021. In addition, higher commodity prices sharply reduce projected payments under the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs. As a result, projected direct government payments to Missouri farmers decline to $218 million in 2022. - Projected farm production expenses increase by almost $800 million in 2021, let by a sharp increase in purchased feed costs. Lower corn and soybean meal prices result in slightly lower feed costs in 2022, but increases in fertilizer expenses, machinery depreciation, and other cost categories result in a small net increase in Missouri farm production expenses next year. These projections should be considered a snapshot given information available in August and early September 2021. Final estimates of 2021 crop yields will differ from those in USDA's August crop report and farm output and input prices will change in response to shifting market conditions.