Many grain farms in Kansas will see record net farm income for 2021, according to Kansas State University agricultural economists. However, considering rising input costs and the unlikelihood of government payments, 2022 is likely to be a different story.
Using data collected from the Kansas Farm Management Association, K-State agricultural economists Gregg Ibendahl and Dan O’Brien released their preliminary calculations of the 2021 Kansas net farm income and offered insights into what’s in store for 2022.
Record-setting
According to Ibendahl and O’Brien, the state average net farm income of $261,000 for 2021 should be the highest it’s been since the KFMA program started keeping computerized records. That’s a 39% increase from 2020.
But they forecast average net farm income to fall by 65% in 2022 to $90,000, and predict a quarter of Kansas farms in 2022 will have a negative net farm income.
“However, that last estimate is still very uncertain, as higher future prices have to translate to higher farm prices, and rainfall amounts have to be around normal for yields to hold at average values,” according to their report.
Factors to monitor
Five factors that Kansas farmers and their lenders need to keep in mind in 2022:
1. Fertilizer. If farmers bought their fertilizer before the price increase, they may have a better chance at profit in 2022. Fertilizer prices are expected to be 50% higher in 2022.
2. Seed. Seed costs in 2022 could be 20% higher than 2021.
3. Pesticide. Pesticide expenses are predicted to increase 8% in 2022.
4. Higher inflation. In 2022, farmers should plan for input costs to rise 5% to 10%, Ibendahl says. Diesel and fuel costs in 2021 are expected to be 30% higher, and an additional 30% higher on top of that in 2022.
5. Crop acres. Considering fertilizer availability and prices, soybean acres are expected to increase 5% in 2022, while corn and grain sorghum acres are projected to be lower.
To see the full preliminary report, visit Preliminary Estimate of 2021 Kansas Net Farm Income and a Projection for 2022.
Kansas State University Research and Extension contributed to this article.