USDA recently released a forecast for lower farm income in 2023. The net farm income estimate for 2022 was $183 billion, and the 2023 forecast is $141.3 billion. Carrie Litowski, a senior economist with the Economic Research Service, says the first factor driving farm income lower is smaller cash receipts.
“The crop cash receipts are forecast to fall $11.2 billion,” according to Litowski. “When combined with the change in inventory adjustments for crops, the value of crop production is forecast to decrease by $.08 billion. That’s less than a one percent decline. Animal and animal products receipts, which I often refer to as livestock receipts, are forecast to fall $11.9 billion with just a small adjustment for changes in inventory.”
The drop in cash receipts comes from lower prices and quantities sold. She says, “The primary factor behind the expected decline in cash receipts in 2023 is lower prices received by farmers for their commodity production. In 2023, total cash receipts are forecast to fall $20 billion due to lower prices, with a smaller change due to lower quantity sold on net. In total, cash receipts are forecast to decrease by $23 billion. Most of the decline in quantity sold is from animal and animal product receipts in 2023. But still, most of the decline in livestock receipts is due to lower prices.”
Another factor squeezing farm income is the cost of inputs.
“Production expenses are forecast to increase $29.5 billion in 2023, which would lower net farm income because we subtract out expenses in the calculation of net income,” according to Litowski. “Additionally, government payments are forecast to fall $2.9 billion, and all other changes represent the forecast increase in farm-related income of $2.3 billion.”
