USDA’s Economic Research Service released its annual Farm Sector Income Forecast Report for 2023 which shows lower net farm income this year. Ag Secretary Tom Vilsack says while net farm income will drop below the record high in 2022, it’s one of the best years on record for the overall farm sector at $151.1 billion.
“In fact, net cash farm income for 2023 is 15 percent above average for the last two decades, and farm income over the 2021-2023 period represents the highest level of farm income in the last 50 years,” he says. “U.S. ag exports have also seen the three highest years on record in 2021-2023, and 2024 is projected to be the fourth-highest year on record despite potential declines.”
A bright spot for farmers is that some production costs, including feed, fertilizer, and pesticides, have declined. Data also shows that off-farm income is needed to make ends meet.
Danny Munch, an economist with the American Farm Bureau, says the picture is a little brighter than the August predictions, but not much. Munch says, “In the August reports, USDA forecasted that farm income from 2022 would drop 23 percent, a $41 billion drop from 2022. In this new November report, they adjusted that number 41 billion $31.8 billion, which is a 17 percent drop from 2022. In total, that would give you a total net farm income of $151 billion for 2023 compared to the $141 billion estimated previously in August.”
He talks about some of the main factors behind the revisions. Munch says, “The most significant revisions are attributable to lower production expenses compared to what they estimated in August. There’s still a $14.9 billion expected increase in what farmers are paying for production expenses, which is about four percent. But that’s seven percent lower than what they forecasted in the August release.”
Munch says there is some good news about the forecast, though overall it is a mixed bag.
He says, “For all categories except fuels and oils, electricity and interest expenses, they adjusted their numbers downward. Things like fertilizer, pesticides, seeds, those all saw decreases from what they estimated that farmers will be paying. Electricity, fuels, oils, interest expenses all saw increases. So those are things farmers saw upward adjustments and are going to pay more for in 2023 than they estimated previously.”
