Net farm incomes in the United States is projected to decrease by $41.78 billion (or 22.8 percent) this year. That’s according to the U.S. Department of Agriculture Economic Research Service’s August 2023 Farm Income Forecast that was released today.
It’s worth noting, however, that 2022 was a record-breaking year for farm income. Net farm income, the ultimate profit scorecard for farmers, soared to a whopping $183 billion, an increase of $42.9 billion, or 30.7 percent, from 2021.
Comparatively, net cash farm income, another important measure of profitability, reached an astonishing $202.2 billion in 2022, a 35.4 percent increase from the previous year.
In 2023, that net income is expected to take a nosedive, dropping by $53.6 billion — a significant 26.5 percent crash.
It’s all a bit of a rollercoaster ride, but things may not be quite as bad as they look. Even with the dips and dives, income measures are expected to stay above their 2003-2022 averages when adjusted for inflation.
Putting these numbers into perspective, when adjusted for inflation, net farm income isn’t quite so dismal, but it is still set to drop by 25.4 percent in 2023. Meanwhile, net cash farm income will drop by 28.9 percent compared to the previous year.
Farming isn’t all about revenue, though, and income in both 2022 and 2023 did not come without a rise in expenses. While 2022, the cost of farming increased by 15.2 percent, production expenses are expected to increase by 6.9 percent over the next year.
Crop receipts are a mixed bag
Crop receipts, the money farmers earn from selling crops, are forecasted to decrease by $11.2 billion, a 4 percent decrease from 2022 levels. However, while crops such as soybeans, corn, wheat, and cotton are expected to see declines, receipts for vegetables and melons are on the rise.
Animal product receipts: Feast and famine
Regarding animal and animal product receipts, it’s a bit of a feast and famine situation. Total receipts are expected to decrease by $11.9 billion (4.6 percent) to $246.6 billion.
Milk, broilers, eggs, and hogs are facing declines, but cattle, calves, and turkeys are forecast to bring in increased cash flow.
Direct government farm payments forecast to drop
While government payments can act as a safety net, the only thing guaranteed in agriculture is uncertainty, and farmers may get a little less help from Uncle Sam this year. Government farm payments are forecasted at $12.6 billion, a decrease of $2.9 billion or 19 percent from 2022.