WASHINGTON (Michigan News Source) – Farmers across the country are expected to experience net income loss by roughly $32 billion in 2023 after last year’s record high according to the United States Department of Agriculture (USDA). 

Since the peak Direct Government farm program payments made by the Federal government to farmers and ranchers peaked in 2020, reaching a record high of $45.6 billion, it has subsequently dwindled year after year. 

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“Direct Government farm program payments decreased to $26.0 billion in 2021 and to $15.6 billion in 2022,” according to the report. “They are forecast to fall further to $12.1 billion in 2023.”

The loss of income can be attributed to a variety of reasons which the report expands upon, but some of the main stumbling blocks are decreased farm cash receipts and animal/animal product receipts.  Another growing issue is the higher operational costs—mainly through increased spending on feed, labor, and livestock/poultry purchases.  

“Total production expenses, including those associated with operator dwellings, are forecast to increase by $14.9 billion (3.5 percent) in 2023 to $443.4 billion,” according to the report. “Interest expenses and livestock/poultry purchases are expected to see the largest increases in 2023 while spending on fertilizer/lime/soil conditioners, fuels/oils, and feed is expected to decline relative to 2022.” 

The report added the caveat that the highest interest expenses to date is expected for 2023, “in inflation-adjusted dollars, interest expenses were at least 50 percent higher in early 1980s.”

“Interest expenses (including expense for operator dwellings) are forecast to have the most significant increase in nominal terms at $10.3 billion (42.9 percent above the 2022 value) to $34.4 billion in 2023,” the USDA report said. “This reflects expectations that both total debt levels and interest rates will rise in 2023.” 

Overall, there is expected to be a forecasted $14.4 billion fall in combined receipts for corn, soybeans and cotton, though fruit and nut receipts are expected to increase. 

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“Corn receipts are expected to fall by $9.4 billion (10.6 percent), because of lower expected prices in 2023,” according to the report. “Soybean receipts are forecast to decrease by $3.6 billion (5.9 percent) in 2023, caused by lower expected prices and quantities. Lower forecasted prices and quantities will result in a decrease of $1.4 billion (16.9 percent) in total cotton receipts. Wheat receipts are forecast to decrease $0.2 billion (1.3 percent), as lower prices will outweigh higher quantities sold. Receipts for hay are projected to increase $0.9 billion (8.6 percent), based on expectations for both higher prices and quantities sold.”

American Farm Bureau Federation (AFBF) Economist Daniel Munch also weighed in on the projected drop, noting that it is a projected forecast. 

“Net farm income numbers for 2022 were not finalized until August 2023 and have been adjusted upward over $20 billion in the eight months since the year ended,” noted Munch in a report. “During this time USDA is digesting new information and data as it becomes available, shifting calculations from estimates to actual values. This means there is still much variability in final 2023 net farm income.”

For the complete USDA report, see here.