FILE PHOTO: On October 7, 2021, a combine harvester is seen harvesting soybeans in Deerfield, Ohio, in the United States.
COLUMBUS – According to a study released on Tuesday by the U.S. Department of Agriculture, rising production costs, a decrease in direct government payments, and easing cash prices for livestock and commodity crops are all likely to contribute to the first annual decline in U.S. farm revenues since 2019.
According to the agency, net farm income, which is a broad gauge of profitability in the agricultural industry, is predicted to be $136.9 billion in nominal dollars in 2023, down about 16% from a year earlier.
According to the government, the decline came after net farm income reached a peak of $162.7 billion in nominal terms in 2022 and $140.9 billion in 2021.
Net farm income is anticipated to decrease by $30.5 billion, or 18.2%, in 2023 when adjusted for inflation.
According to economists, when farm earnings decline and costs rise, farmers may become more hesitant to try extending their crop production operations or to spend more on land or machinery during a period of low global grain supply.
According to the agency, reduced commodity prices, notably for maize and soybeans, balance rising sales volumes to cause revenue pressure in the agriculture sector.
The USDA also reported decreasing prices for dairy, pigs, broilers, and chicken eggs sold by farmers.
The USDA did point out that this year’s projected net farm income in inflation-adjusted dollars is estimated to be close to 27% higher than its 20-year average.
Overall production costs are anticipated to rise 4.1% in nominal terms, according to the USDA. The biggest dollar increases in interest costs are anticipated for acquired livestock and poultry, operating debt, and real estate debt.
According to the organization, some costs, such as those for gasoline, fertilizer, and animal feed, are predicted to decrease.
According to Carrie Litkowski, an economist with the USDA Economic Research Service, both farm equity and debt are expected to rise over the next years, mostly as a result of increased land and equipment prices.