High Commodity Prices Feed a Boom in the U.S. Farm Belt

...U.S. net farm income is expected to surge to $160.5 billion this year, boosted by increased prices for farm goods ranging from wheat to milk, according to a key U.S. Department of Agriculture forecast in December. If realized, farm income would reach the highest level since 1973 in inflation-adjusted dollars, marking a sharp recovery from an agricultural recession that battered farmers and their suppliers during the past decade. 

U.S. grain producers have benefited this year as prices for crops including corn and wheat soared following Russia’s February invasion of Ukraine, a major breadbasket nation. Poor weather in some growing areas also helped lift crop markets, and cattle ranchers have commanded higher prices for their animals as the U.S. herd shrank due to rising costs for feed and other goods.

The USDA expects farmers’ earnings to jump 14%, or nearly $20 billion, from 2021. Cash receipts for corn, soybeans, wheat and other crops are projected to climb 19%, while receipts for animals and animal products are forecast to rise 31% from last year, the USDA said, with increases due mostly to higher prices.

...Higher prices for farmers’ crops and livestock have contributed to a sharp increase in U.S. families’ food costs. A Labor Department index showed that U.S. grocery prices in November had climbed 12% over the past 12 months.

Indexes for cereals and bakery products as well as dairy and related products both rose more than 16%, while those for other major food groups increased between 7% and 14%.

...Broader economic struggles could eventually ripple out to farmers, if demand for agricultural commodities falters as farmers’ expenses rise. Climbing interest rates also make borrowing for purchases such as land and equipment more costly, potentially constraining future buying...WSJ