The United States Department of Agriculture’s Economic Research Service has released a forecast indicating a downturn in the U.S. farm sector’s financial outlook for 2023. Despite this, Agriculture Secretary Tom Vilsack has pointed out that the sector is still faring relatively well.
The projected net farm income stands at $151.1 billion, which, although lower than 2022’s figures, remains significantly above the two-decade average.
Vilsack emphasised that the 2021-2023 period has seen the highest farm incomes in the last half-century, bolstered by robust U.S. agriculture exports. However, 2024 is expected to see a slight dip, ranking as the fourth highest year on record.
Addressing the income distribution within the sector, Vilsack acknowledged the reliance of many farm households on off-farm jobs to supplement their income. This highlights the uneven spread of income across different farm sizes and types. In response, the USDA is focusing on enhancing market opportunities and climate-smart agriculture practices, particularly for small- and mid-sized farms.
The expected change in net farm income for 2023 is attributed to a combination of factors, including lower commodity prices, increased production costs, higher interest rates, and a reduction in government payments from their 2020 peak.
On a positive note, some production costs, such as feed, fertiliser, and pesticides, have seen a decrease. These changes are being taken into account by the USDA in their program planning and in collaboration with Congress for the upcoming farm bill.
The ERS projects a 23.8% decrease in U.S. net cash farm income, falling from $207.1 billion in 2022 to $157.9 billion in 2023. Net farm income is also expected to decrease by 20%, from $188.9 billion in 2022 to $151.1 billion in 2023. This follows record highs in both income measures in 2022.
Cash receipts from farm commodities in 2023 are forecasted to decrease by 7.8% to $509.6 billion, with declines anticipated in sectors such as milk, corn, and broilers. Total production expenses are projected to remain stable, with a marginal increase to $443.4 billion in 2023.
However, there will be variations in individual expense items, including an expected increase in interest expenses and a decrease in spending on fertiliser, lime, soil conditioners, and feed.
Direct government payments to farmers are also projected to fall by 24.8% to $12.1 billion in 2023, mainly due to reduced supplemental and ad hoc disaster assistance.
This forecast provides a nuanced view of the U.S. agricultural sector’s financial health in 2023, reflecting the complexities and varying factors influencing farm incomes.
