Boise, Idaho – Idaho is projected to have set a massive all-time record for total farm revenue in 2022. However, the state is also projected to have set a massive all-time record for total farm expenses last year.
When it comes to total farm cash receipts – this is the revenue that farmers and ranchers receive for their commodities – “We blew the socks off of almost every ag category in the state last year,” University of Idaho Agricultural Economist Garth Taylor told Idaho lawmakers Jan. 5.
Taylor shared with legislators the highlights of the university’s “The Financial Condition of Idaho Agriculture: 2022” report.
The report estimates that Idaho farmers and ranchers brought in $11 billion in total farm cash receipts in 2022. That was 26 percent higher than the previous record of $8.8 billion set in 2014 and 29 percent higher than the 2021 total of $8.6 billion.
However, Idaho also set a record for total farm production expenses in 2022, in virtually every category of expense.
According to the university’s annual Financial Condition of Idaho Agriculture report, farm and ranch expenses in Idaho totaled $8.9 billion in 2022, 20 percent higher than the 2021 total of $7.5 billion, which was a record at the time.
Put simply, Idaho farmers and ranchers had $1.4 billion in additional production expenses last year.
The cost of manufactured inputs, which include fertilizer, chemicals and fuel, were up an estimated 40 percent compared with 2021, while farm-origin inputs, which include feed, seed and replacement livestock purchases, were up 13 percent, according to the report.
The report projects a 17 percent increase in payments to stakeholders, a category that includes net rents and interest expense.
All other farm production costs, including property taxes and fees, labor and capital consumption, rose by 2-11 percent compared with 2021.
According to the report, Idaho producers spent $1.8 billion on feed last year, $1 billion on fertilizer, $417 million on pesticides, $393 million for fuel, $975 million for hired labor and $567 million on interest expenses.
“Farm expenses were very high this past year,” U of I Agricultural Economist Brett Wilder, one of the report’s co-authors, along with Taylor, told Idaho Farm Bureau Federation. “That has been a worry, as you talk to folks in farm country. They are feeling the cost pinch.”
“It was ridiculous,” Kimberly hay and barley farmer Rick Brune said of the farm production cost increases in 2022. “A lot of things were 20-30 percent higher than normal.”
Brune said he avoided growing corn last year because of significantly higher fertilizer costs.
New Plymouth farmer Galen Lee said the cost for a lot of fertilizer was two to three times higher last year and he added, “We’ve all seen what fuel prices have done. It’s pretty crazy.”
Aberdeen potato farmer Ritchey Toevs said all of his energy and transportation-related costs in 2022 were double what they were the previous year. His largest on-farm cost increase was a 150 percent rise in his operating interest, which went from about $55 an acre in 2021 to $138 an acre in 2022.
Twin Falls farmer Larry Hollifield said total farm cash receipt records will continue to happen just due to natural inflation. The thing that really matters, he added, is whether that revenue is enough to cover rising expenses.
“Yes, I received more for my commodities last year, but I also had to pay more to produce them,” he said. “I didn’t make any more money than normal last year.”
Taylor presented the highlights of the Financial Condition of Idaho Agriculture report to members of the Idaho Legislature’s Joint Legislative Economic Outlook and Revenue Assessment Committee.
This committee meets annually just before the legislature convenes, to set a revenue estimate for the state that legislators use to set budgets for the next fiscal year.
Fortunately for the state’s collective agriculture industry, commodity price increases are expected to have outweighed farm production cost increases in 2022.
The report estimates Idaho net farm income totaled a record $3 billion last year, eclipsing the previous record of $2.6 billion set in 2020.
But Taylor cautioned legislators that net farm income is a volatile measurement and the state has over the past decade experienced huge swings up and down from one year to the next when it comes to net farm income.
“There’s no other industry in the state of Idaho where the volatility is as great as it is in agriculture,” he said.
The good news for the state’s economy, he told Farm Bureau, is that farmers and ranchers spend about the same amount of money on farm inputs each year regardless of whether they had a good year or not.
That acts to help stabilize the state’s overall economy, especially in rural areas that are heavily dependent on agriculture, he said.
The report shows that agriculture in Idaho accounts directly and indirectly for 1 in every 8 jobs in the state, 12.5 percent of the state’s total gross domestic product, and 17 percent of Idaho’s total economic output.
During his presentation to lawmakers, Taylor cautioned against blaming agricultural producers for any increases in food costs. Farmers and ranchers get, on average, about 8 cents of every food dollar spent in the United States, he said.
“It is not farm prices that push increases in food prices,” he said. “It is transportation and other price increases that push them.”
While the state’s agricultural industry as a whole did experience a bump in collective net farm income last year because of much higher commodity prices, there is significant concern among farmers and ranchers about rising expenses, said Wilder, a sheep rancher from Meridian.
“If those cost categories continue to climb and we have some normalization of … commodity prices, we’re in trouble,” he said. “Ag is a margins game. If your margins get upside down, you’re done.”
When it comes to total farm cash receipts, many of Idaho’s top agricultural commodities set records last year, according to the U of I report.
Dairy remained Idaho’s top agricultural commodity when it comes to total farm cash receipts with a record $4.2 billion in revenue in 2022, a 38 percent increase over 2021.
Cattle and calves brought in $1.9 billion in farm cash receipts in 2022, 16 percent more than the 2021 total.
Potatoes remained Idaho’s top crop with a record $1.3 billion in total revenue in 2022, a 36 percent increase over 2021. That eclipsed the previous record of $954 million set in 2019.
Hay bumped wheat to become the state’s No. 4 agricultural commodity in terms of total revenue, as the state’s hay growers brought in a record $725 million in farm cash receipts last year, a 39 percent increase over 2021.
Idaho wheat farmers brought in a total of $706 million last year, a 13 percent increase over 2021.
Sugarbeets ranked as the state’s No. 6 ag commodity in total revenue with a record $385 million in farm cash receipts in 2022, a 7 percent increase over 2021.
Idaho barley growers brought in a record $357 million in farm cash receipts last year, a 32 percent increase over 2021.