US farm income is forecast to sag in 2023, although it is coming down from a heightened level and is projected to remain well above the average of the last two decades.
In a farm income report Thursday, the USDA pegged American net farm income for the calendar year at $151.1 billion, down 17.4% in nominal (not adjusted for inflation) dollars. After adjusting for inflation, the decline is even steeper, down 20% or almost $38 billion from 2022.
However, this year’s fall in net farm income follows a record high in 2022 and would still be 31.4% above the 20-year average of $115 billion in inflation-adjusted dollars, the USDA said.
Overall, US farm income over the 2021-2023 period represents the highest level of farm income in the last 50 years. American agriculture exports have also seen the three highest years on record in 2021-2023, which is reflected in overall cash receipts, while 2024 is projected to be the fourth highest year on record despite potential declines.
Cash receipts from the sale of agricultural commodities are forecast to decrease by $25.2 billion (-4.7% in nominal terms) from a record high of $534.8 billion in 2022 to $509.6 billion in 2023. Total crop receipts are expected to decrease by $12.1 billion (-4.4%) from 2022, led by lower receipts for corn and soybeans. Total animal/animal product receipts are projected down by $13 billion (-5%), following declines in receipts for milk, broilers, eggs, and hogs.
Also contributing to lower forecast net income in 2023 are lower direct government payments and higher production expenses.
Direct government payments are forecast to fall by $3.5 billion (-22.3%) from 2022 to $12.1 billion in 2023. Meanwhile, total production expenses, including operator dwelling expenses, are expected to increase by $14.9 billion or 3.5% to $443.4 billion in 2023. Interest expenses and livestock/poultry purchases are likely to see the largest increases in 2023 relative to 2022, the USDA said.
“The change in net farm income this year is reflective of overall lower prices for farmers, higher production costs and higher interest rates, and declining government payments since their 2020 record levels,” US Agriculture Secretary Tom Vilsack said in a statement.
"A bright spot for farmers is that some production costs, including feed, fertilizer and pesticides, have declined.”
