Less than two months away, the virtual 98th Agricultural Outlook Forum will kick off with a presentation by Seth Meyer on the USDA's outlook for U.S. commodity markets and trade for 2022 and the U.S. farm income situation. This week the top USDA chief economist says he hopes he's wrong, but right now he's projecting that 2022 will be more challenging for producers than this past year has been.
"We might ease off of what have been pretty good prices, so expect a little bit of a softening on cash receipts," Meyer says.
He also expects costs for fertilizers, fuel and other inputs to continue very high, eating away at margins. However, because 2021 has been so profitable, Meyer says producers should be in a "good position to weather what are going to be those increasing input costs in the new year."
After 2021 began, Meyer projected that farm income this year would drop from 2020, but that turned out not to be the case. Government payments to farmers were set to be cut by over 40% this year, but demand for agricultural products was strong, pushing most commodity prices up and farm income up 23% from 2020.
Meyer says he would be more than happy to be wrong again.
"I'm not ringing the fire alarm. I'm just saying, keep an eye on things, because this was quite a good year and I'd be happy to be wrong in the same way next year," Meyer says. "I'd be happy to be wrong and say margins may be a little bit tighter next year and be totally wrong and have a great farm income year and just blow the doors off again."
Meyer cautions the industry to be ready for either scenario.
"I think they're prepared. I think the sector as a whole is prepared quite well in terms of debt to asset ratios and the health of the overall farm economy," Meyer says. "I do worry a little bit about this late season run on input prices."