At this year’s Ag Outlook Forum, a senior economist with the Economic Research Service warned producers those record highs seen last year are about to fall.
“We’re forecasting that farm-sector income has reached record highs in 2022 and will decrease in 2023 as commodity prices fall and total expenses remain elevated. First, net cash farm income in 2023 is forecast to increase by about 20 percent relative to 2022. Net farm income is forecast to decline about 16 percent in 2023,” Carrie Litowski, a senior economist with the ERS said.
Litowski says profits from commodity sales will likely fall as well.
“A major component of farm income is cash receipts from the sale of agricultural commodities, and these are expected to decrease about four percent from a forecast record high in 2022. Further contributing to lower income in 2023 are direct government payments, which are forecast to fall about 34 percent, and total production expenses, or the costs that farmers incur to produce their output, is forecast to increase about four percent,” Litowski said.
However, she says farm balance sheets are still relatively strong this year but that won’t stop net farm income from taking a dive.
“When we look at the balance sheet, it’s relatively strong with assets, debts, and equity all forecast to increase in 2023. We also put out some data on net cash farm income averages for farm businesses, and all farm businesses are expected, on average, to see net farm income fall about 18 percent.”
