The U.S. Department of Agriculture (USDA) has projected that farm income in 2023 will decline significantly from 2022. The agency's forecast calls for net farm income to reach $141.3 billion in 2023, a decrease of $41.7 billion, or 22.8%, from the record high of $183 billion in 2022.
The decline in net farm income is being driven by a number of factors, including lower cash receipts from the sale of agricultural commodities, reduced government payments, and rising production expenses.
Cash receipts from the sale of agricultural commodities are forecast to decrease by $23.0 billion in 2023, or 4.3%, from the record high of $536.6 billion in 2022. This decrease is being driven by lower prices for corn, soybeans, milk, broilers, eggs, and hogs.
Government payments are also expected to decline in 2023. The USDA is forecasting direct government payments to fall by $2.9 billion, or 19%, from $10.8 billion in 2022. This decrease is primarily due to lower supplemental and ad hoc disaster assistance expected in 2023.
Production expenses are also expected to rise in 2023. The USDA is forecasting production expenses to increase by $29.5 billion, or 6.9%, to reach $458.0 billion in 2023. This increase is being driven by higher costs for interest, livestock/poultry purchases, and other inputs.
The decline in farm income is expected to have a significant impact on farm businesses. The USDA is forecasting that average net cash farm income for these businesses will decrease by 19.7% in 2023, resulting in an average income of $87,300 per farm. This decrease is anticipated across most USDA Farm Resource Regions, with only cattle/calves specialized businesses expected to see an average net cash farm income increase of 36.3%. Farms specializing in dairy are projected to experience the most significant decline relative to 2022.
The USDA's 2023 farm income projections signal a challenging year for the agricultural sector. Farmers and farm businesses will need to navigate these challenges in the coming year.
• The USDA's farm income projections are based on a number of assumptions, including commodity prices, government policies, and weather conditions. These assumptions could change, which could impact the actual level of farm income in 2023.
• The decline in farm income is not unique to the United States. Farmers around the world are facing similar challenges, due to factors such as rising input costs and trade disruptions.
Overall, the USDA's 2023 farm income projections are a reminder of the challenges facing the agricultural sector. However, farmers and farm businesses have shown resilience in the past, and they are likely to continue to do so in the future.
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Categories: Michigan, Business