Farm sector profits are projected to fall in 2023 after record highs in 2022. Net farm income, a broad measure of profits, is forecast at $136.9 billion in the calendar year 2023, a 15.9 percent decrease compared to 2022.
In 2022 the agriculture industry reached a record high of $167.3 billion, its highest level since 1973 after adjusting for inflation. Despite the expected decline in 2023, net farm income would remain 26.6 percent above its 20-year average of $108.1 billion in inflation-adjusted dollars.
When adjusted for inflation, the U.S. Department of Agriculture anticipates that gross cash income minus cash expenses will decrease by $44.7 billion, to $150.6 billion, in 2023, a 22.9 percent decline.
Meanwhile, cash receipts from the sale of agricultural commodities are forecast to decrease by $23.6 billion or 4.3 percent from a forecast record high of $543.4 billion in 2022 to $519.9 billion in 2023.
Contributing to forecast lower income in 2023 are lower direct government payments and higher production expenses. Direct government payments are forecast to fall by $5.4 billion or 34.4 percent from 2022 to $10.2 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 $18.2 billion or 4.1 percent to $459.5 billion in 2023. Interest expenses and livestock and poultry purchases are expected to see the largest dollar increases in 2023 relative to 2022.
Average net cash farm income for farm businesses is also forecast to decrease this year by 17.7 percent from 2022. When grouped by commodity specialization, all commodity specializations of farm businesses are forecast to see lower average net cash income in 2023. Those specializing in dairy and hogs are expected to see the largest decline relative to 2022.
Farm operator household income will increase nominally, but will decrease after inflation. Farm households typically receive income from both farm and off-farm sources. Median farm income earned by farm households is forecast to decrease in 2022 to -$683 from $210 in 2021, and then forecast to decline further to -$1,125 in 2023.
Many farm households primarily rely on off-farm income: median off-farm income in 2022 is forecast at $88,201, an increase of 6.5 percent (a decrease of 0.2 percent after inflation) from $82,809 in 2021, and to continue increasing by 3.3 percent (0.4 percent after inflation) to $91,080 in 2023.
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.
