In 2023, U.S. Farm Revenues May Fall After Reaching Historic Highs

The U.S. Department of Agriculture stated on Tuesday that farm earnings are likely to decline for the first time since 2019 due to increasing production costs, a decrease in direct government subsidies, and a decline in cash prices for commodities crops and livestock.

The agency predicts that net farm income, a broad gauge of profitability in the agricultural economy, will reach $136.9 billion in nominal terms in 2023, down roughly 16% from the previous year.

According to the government, the decline follows a net farm income peak of $162.7 billion in nominal dollars in 2022 and $140.9 billion in 2021.

In 2023, net farm income is anticipated to decrease by $30.5 billion, or 18.2%, when adjusted for inflation.

As farm revenues decline and expenses grow, according to economists, producers may be more hesitant to try increasing their crop production operations or spending more on machinery or land during periods of low global grain supplies.

According to the agency, a significant portion of the income pressure in the agricultural sector resulted from decreased commodity prices, particularly corn and soybeans, which more than offset rising sales volumes.

The USDA also reported price declines for dairy, pork, broilers, and chicken eggs sold by farmers. In 2023, monetary receipts from cattle are anticipated to stay generally steady.

Inflation-adjusted dollars, the net agricultural income is estimated to be roughly 27% more than the 20-year average, according to the USDA.

Overall production costs are predicted to climb 4.1% in nominal dollars, according to the USDA. Interest expenses on operations and real estate loans, as well as livestock and poultry purchases, are anticipated to climb the most.

The ministry claimed that expenses for fertilizer, fuel, and animal feed are projected to decrease.

Carrie Litkowski, an economist with the USDA Economic Research Service, predicts that while farm sector debt will continue to rise, so will agricultural equity, primarily due to increased land and equipment values.