The Agriculture Department expects net farm income to decline in 2023 amid falling agriculture commodity revenues, higher production expenses and a decline in direct payments from the government.
The USDA's Economic Research Service projects an overall net farm income of $141.3 billion in 2023, a substantial drop from last year's record high of $183 billion, according to its August 2023 Farm Income Forecast. The ERS figures are more dire when adjusted for inflation; net farm income is projected to drop about 25.4% in 2023 relative to 2022's record returns.
While the ERS report details a sizable drop in its income projections, the expected returns would still be about 22.6% above the 20-year average of $115.2 billion when adjusted for inflation.
Cash receipts from sales of agricultural commodities are expected to fall from $536.6 billion in 2022 to $513.6 billion in 2023, a 4.3% nominal drop the agency believes will contribute to the overall drop in net farm income. Direct government payments, meanwhile, are expected to drop 19% to $12.6 billion in 2023, due to lower supplemental and ad hoc disaster assistance.
The agency predicts lower receipts for corn and soybeans will cause revenue from crops to drop $11.2 billion, or 4%, from 2022, while animal product receipts will decrease $11.9 billion, or 4.6%. ERS says returns from milk, broilers, eggs and hogs will drive the overall decline for animal product receipts.
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While returns across many categories are expected to drop, production expenses are forecast to increase 6.9% to $29.5 billion, ERS projected.
Farms specializing in nearly every commodity are expected to see their annual net cash farm incomes fall from 2022, though according to ERS, dairies will experience the largest drops. Cattle operations, however, are projected to see their net cash farm incomes increase 36.3%.
Thursday's report is the second of three farm income data rollouts from ERS. The first release was in February, when ERS projected a 20.7% drop in net cash farm income. This report incorporated state-level farm income estimates and updated the 2023 forecast, which will updated again in a report scheduled to be released Nov. 30.
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