The USDA’s Economic Research Service released its 2023 Farm Income Report, which showed a significant drop in income compared to last year. Carrie Litowski, senior economist with the ERS, says the 2023 numbers are lower than the record high last year.

“In 2022, net cash farm income increased 25 percent, or $42 billion, from 2021, putting it at its highest level on record in the inflation-adjusted series. In 2023, net cash farm income is forecast to decrease nearly 24 percent, or $49 billion. Net farm income increased 22 percent, or $34 billion, in 2022 to its highest level on record, and in 2023, net farm income is forecast to fall 20 percent, or $38 billion. We have the forecast for 2023 at 151.1 billion dollars.”

She says lower commodity prices are one factor behind the drop in income.

“Crop cash receipts are forecast to decrease $12 billion. When combined with the change in inventory adjustments for crops, the value of crop production for 2023 is forecast to decrease by $3.4 billion from 2022. In 2022, about $11.5 billion in crop receipts or sales were from inventory. In 2023, we are forecasting sales from inventory to also be occurring, but at a much lower amount, about three billion compared to the $11.5 billion. Receipts for animal and animal products are forecast to decrease $13 billion.”

Production expenses will cut into 2023 earnings.

“Further reducing income in 2023 are production expenses, which are forecast to increase $14.9 billion in 2023, and these higher expenses will lower income. Additionally, direct government payments to farm operators are forecast to decrease by $3.5 billion in 2023. So overall, we’re looking at net farm income declining to $31.8 billion, or 17 percent, in 2023 in nominal dollars.”