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U.S. Department of Agriculture, Economic Research Service. Farm Sector Income & Finances: Highlights from the Farm Income Forecast, November 30, 2023.
Farm Sector Profits Forecast To Fall in 2023
Net farm income, a broad measure of profits, is forecast at $151.1 billion in calendar year 2023, a decrease of $31.8 billion (17.4 percent) relative to 2022 in nominal (not adjusted for inflation) dollars. This follows an increase of $42.4 billion (30.2 percent) from 2021 to a record high of $182.8 billion in 2022. After adjusting for inflation, net farm income is forecast to decrease $37.9 billion (20.0 percent) in 2023 relative to 2022. Despite this expected decline, net farm income in 2023 would be 31.4 percent above its 20-year average (2003–22) of $115.0 billion in inflation-adjusted dollars.
Net cash farm income is forecast at $157.9 billion in 2023, a decrease of $42.5 billion (21.2 percent) relative to 2022 (not adjusted for inflation). This follows an increase of $51.1 billion (34.2 percent) from 2021 to 2022. When adjusted for inflation, 2023 net cash farm income is forecast to decrease by $49.2 billion (23.8 percent) from a record high of $207.1 billion in 2022. Despite the decrease, net cash farm income in 2023 would be 15.0 percent above its 2003–22 average of $137.3 billion. Net cash farm income encompasses cash receipts from farming as well as cash farm-related income (including Federal Government payments) minus cash expenses. It does not include noncash items (including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings) reflected in the net farm income measure.
Cash receipts from the sale of agricultural commodities are forecast to decrease by $25.2 billion (4.7 percent, in nominal terms) from a record high of $534.8 billion in 2022 to $509.6 billion in 2023. Total crop receipts are expected to decrease by $12.1 billion (4.4 percent) from 2022, led by lower receipts for corn and soybeans. Total animal/animal product receipts are expected to decrease by $13.0 billion (5.0 percent), following declines in receipts for milk, broilers, eggs, and hogs.
Also contributing to lower forecast net income in 2023 are lower direct Government payments and higher production expenses. Direct Government payments are forecast to fall by $3.5 billion (22.3 percent) from 2022 to $12.1 billion in 2023. This decrease is expected largely because of lower supplemental and ad hoc disaster assistance in 2023 relative to 2022. Meanwhile, total production expenses, including operator dwelling expenses, are forecast to increase by $14.9 billion (3.5 percent) to $443.4 billion in 2023. Interest expenses and livestock/poultry purchases are expected to see the largest increases in 2023 relative to 2022.
Average net cash farm income for farm businesses is forecast to decrease 8.6 percent from 2022 to $99,300 per farm in 2023 (in nominal terms). Six out of nine USDA, Economic Research Service (ERS) Farm Resource Regions are expected to see average net cash farm income fall in 2023 relative to 2022, with farm businesses located in the Northern Crescent region expected to see the largest decline. In contrast, the average net cash farm income for farm businesses in the Eastern Uplands region is forecast to increase from 2022 to 2023. When grouped by commodity specialization, all farm businesses specializations except cattle/calves, wheat, and specialty crops are forecast to see lower average net cash income in 2023. Farms specializing in dairy are expected to see the largest decline relative to 2022.
Farm sector equity is expected to increase by 6.9 percent ($229.4 billion) in 2023 to $3.57 trillion in nominal terms. Farm sector assets are forecast to increase 6.6 percent ($254.0 billion) in 2023 to $4.09 trillion following expected increases in the value of farm real estate assets. Farm sector debt is forecast to increase 5.0 percent ($24.6 billion) in 2023 to $520.7 billion. Debt-to-asset levels for the sector are forecast to improve from 12.93 percent in 2022 to 12.73 percent in 2023. Working capital is forecast to fall 5.0 percent in 2023 relative to 2022.
Get the 2023 forecasts for farm sector income or see all data tables on farm income indicators.
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Median Income of Farm Operator Households Forecast To Increase in Nominal and Inflation Adjusted Dollars in 2023
Median total farm household income is forecast to increase to $99,802 in 2023. That is a nominal increase of 4.6 percent (a 1.2 percent increase after inflation) between 2022 and 2023.
Farm households typically receive income from farm and off-farm sources. Median farm income earned by farm households is forecast to increase in 2023 to -$550 from -$849 in 2022. Many farm households primarily rely on off-farm income: median off-farm income in 2023 is forecast at $84,745, an increase of 4.5 percent (1.1 percent after inflation) from $81,108 in 2022. Since farm and off-farm income are not distributed identically for every farm, median total income will generally not equal the sum of median off-farm and median farm income.
See the Farm Household Income and Characteristics data product tables for financial statistics of farm operator households.
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See also
- Farm Sector Income and Finances for a discussion of the full farm sector income forecast.
- Farm Household Well-being for a discussion of the farm household income forecast.
- Farm Income and Wealth Statistics for the complete farm income forecast data and full history of U.S. and State farm sector estimates.
- Charts and Maps About Your State, Charts and Maps of U.S. Farm Sector Balance Sheet Data, and Charts and Maps of U.S. Farm Income Statement Data for farm sector data visualizations.
- Farm Household Income and Characteristics for data related to farm household income and characteristics.
- ARMS Farm Financial and Crop Production Practices data that underpin the farm income forecast and estimates.
As an expert in agricultural economics and farm sector analysis, I can provide a comprehensive breakdown of the key concepts discussed in the provided article from the U.S. Department of Agriculture, Economic Research Service. My expertise is grounded in a thorough understanding of farm sector income, finances, and the factors influencing the forecast for the year 2023.
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Net Farm Income and Net Cash Farm Income:
- Definition: Net farm income is a broad measure of profits in the agricultural sector, while net cash farm income focuses on cash receipts and expenses.
- 2023 Forecast: Net farm income is projected to be $151.1 billion, a 17.4% decrease from 2022. Net cash farm income is forecast at $157.9 billion, a 21.2% decline from the previous year.
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Cash Receipts from Agricultural Commodities:
- Definition: Cash receipts represent income generated from the sale of agricultural commodities.
- 2023 Forecast: Cash receipts are expected to decrease by $25.2 billion (4.7%) from the record high of $534.8 billion in 2022 to $509.6 billion in 2023.
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Direct Government Payments and Production Expenses:
- Direct Government Payments: Financial support from the government to farmers.
- Production Expenses: Costs associated with farming activities.
- 2023 Forecast: Direct Government payments are expected to fall by $3.5 billion (22.3%), and production expenses are projected to increase by $14.9 billion (3.5%).
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Average Net Cash Farm Income by Region and Specialization:
- Regional Variances: Six out of nine USDA Farm Resource Regions are expected to see a decline in average net cash farm income in 2023. The Northern Crescent region is forecasted to experience the largest decline.
- Specialization Impact: Except for cattle/calves, wheat, and specialty crops, all farm business specializations are forecasted to see lower average net cash income in 2023.
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Farm Sector Equity, Assets, Debt, and Working Capital:
- Equity: The net value of assets after deducting liabilities.
- Assets: Total value of resources owned by the farm sector.
- Debt: Total liabilities of the farm sector.
- Working Capital: Current assets minus current liabilities.
- 2023 Forecast: Farm sector equity is expected to increase by 6.9%, assets by 6.6%, debt by 5.0%, and working capital to fall by 5.0%.
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Median Income of Farm Operator Households:
- Forecast: Median total farm household income is expected to increase to $99,802 in 2023, with a nominal increase of 4.6% (1.2% after inflation) from 2022.
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Farm and Off-Farm Income for Farm Households:
- Income Sources: Farm households typically receive income from both farm and off-farm sources.
- 2023 Forecast: Median farm income is forecast to increase to -$550, while median off-farm income is expected to rise to $84,745.
These insights are crucial for understanding the dynamics of the agricultural sector, assessing the financial well-being of farm households, and making informed decisions regarding policy and investment in the agricultural industry. If you need further clarification or analysis on any specific aspect, feel free to ask.
