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Guebert: Drought, war, inflation and consumer disconnect

The big difference between USDA’s 2021 income figures and its 2022 income forecast, however, is federal government payments to farmers. A year ago those dollars totaled a whopping $25.5 billion; in 2022, the payments totaled “only” $13 billion.

Alan Guebert
Alan Guebert
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By almost any measure, 2022 has been a tough year for most. Inflation, war, the growing consequences of climate change, and widening political divide are just a few of the compounding woes we continue to deal with as harvest and U.S. midterm elections loom.

In the middle of this chaos, however, U.S. farmers received remarkably good news. According to estimates released by the U.S. Department of Agriculture (USDA) on Sept. 1, net farm income — what the USDA describes as “a broad measure of profits” — for 2022 will rise $7.3 billion to hit a record $147.7 billion.

If accurate, that means U.S. net farm income will be up more than 54 percent in the last two years from 2020’s much slimmer $94.5 billion.

The big difference between USDA’s 2021 income figures and its 2022 income forecast, however, is federal government payments to farmers. A year ago those dollars totaled a whopping $25.5 billion; in 2022, the payments totaled “only” $13 billion.

The USDA report came on the heels of an even rosier 2021 farm income analysis of the 5,600 farm operators in Illinois’ Farm Business Farm Management (FBFM) program issued earlier by the University of Illinois. That dive into actual 2021 farm records pegged the “average Illinois FBFM farm income” at a knee-buckling $433,386, an 80 percent rise over 2020’s non-too-shabby $240,279.

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The jet fuel for the rise came from two sources, according to the analysis; higher yields and higher prices. Together, the two raised actual per acre average returns from 2020’s plump $861 to 2021’s fat $1,064.

And, yes, “average” means average; many FBFM farms showed higher incomes, others lower.

If you break the composite numbers out by farm enterprise, more surprises leap out. For example, FBFM hog farms earned an average 2021 net income of $780,000. That’s $360,000-plus more than the farms earned the year before.

Likewise, beef enterprises earned an average $494,143 in 2021 according to the records of the cooperative farm management service, or almost $50,000, more than the average Illinois grain farm.

And, no surprise given milk’s flat price last year, the net income across all FBFM dairy farms in Illinois was — by a comparison — a piddling $162,267.

Coincidentally, another University of Illinois website, the popular, authoritative farmerdocDaily, released the results of a farm policy survey Sept. 1 that queried “about 1,000 consumers about their views on inflation and whether the government should increase support for farmers and consumers facing higher prices.”

The results were as eye-popping as the Illinois net farm income numbers.

For example, most consumers — like most economists and politicians — are deeply split on what is responsible for today’s income-eating inflation. The survey’s most cited cause, “government policy,” led with 30 percent. Closely behind, though, was Covid (22 percent), corporate profits (15 percent), and supply chain issues (15 percent).

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Not surprisingly, 57 percent of respondents who identified themselves as “conservatives” blamed “government policy” for inflation compared to only twelve percent who viewed themselves as “liberal.”

When the group was asked whether they “supported increases in funding for both food programs and farmers,” over 60 percent — across “political ideologies” — said they did.

“Liberals had the highest rates of support for both,” according to the results, “with 90.2 percent supporting increased funding for food programs and 85.3 percent supporting increased funding for farmers.”

While “conservative” support in both areas was lower, the results still showed significant backing for increased funding for food programs, 64.4 percent and even higher support , 66.4 percent, for increased funding for farmers.

Maybe the most remarkable aspect of both sets of numbers — the sky-high 2021 average net farm incomes in Illinois and the surprisingly high support across the political spectrum for more government support for food aid and farmers — is the almost complete disconnect by consumers between the two.

I mean, what would the polling have shown if the more than 1,000 conservatives, liberals and moderates surveyed were told that the average Illinois grain farmer earned a net income of $443,000 in 2021?

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