US farm incomes to fall in 2023 after record highs

Farm net income, which the agency says is a broad measure of profit in the agricultural economy, is projected to reach $136.9 billion in 2023 in nominal terms, down nearly 16% from a year earlier. The agency said the drop came after farm net income peaked at $162.7 billion in nominal terms in 2022 and $140.9 billion in 2021.

Inflation-adjusted, net farm income is projected to fall $30.5 billion, or 18.2%, in 2023 from a year earlier. 

Economists say that as farm incomes fall and costs rise, this pressure could force producers to be more cautious when trying to expand their crop operations or spend more on machinery or land at a time of low global grain supplies.

The agency said that much of the pressure on earnings in the horticulture sector was due to lower prices for traded commodities, especially corn and soybeans, and that the drop in prices offset higher sales volumes.

The USDA also noted a decline in the prices farmers received for selling dairy products, pigs, broilers and chicken eggs. Cash receipts from cattle are expected to remain relatively stable in 2023.

Still, the USDA noted that farm net income is expected to be nearly 27% higher this year than the 20-year average in inflation-adjusted dollars.

In nominal DOLLAR terms, production costs are expected to increase by 4.1% overall, the USDA said. Interest expense on operating debt and real estate debt, as well as purchased livestock and poultry, is expected to increase in the largest dollar terms. The agency said some costs, including fertilizer, fuel and livestock feed, will be reduced.