This is based to a USDA Economic Research Service (ERS) projection, which is influenced by several financial performance measurements such as revenues and costs, gross and net value added, and net cash income, as well as changes in assets, wealth, and financial ratios.
Net farmer income for all agriculture sectors is forecast to decrease by $30.5 billion (18.2%), while net cash income is likely to fall by $44.7 billion (nearly 23%) from last year. Both numbers have been adjusted for inflation. Even if the negative estimates are achieved, both indicators will remain above 2020 levels and above the 2002-2021 average, according to the ERS. Lower pricing will mostly drive the downward trend.
According to estimates, dairy producers are facing a perfect storm.
Milk revenues are expected to dip 14.6%, or $8.4 billion, according to the ERS, a drop only topped by chicken egg sales (-24%). Dairy producers are set to experience an increase in assistance under the Dairy Margin Coverage Program (DMC), which is expected to provide US$285 million in payments in 2023, an increase of US$156.7 million, or 122.2%. The program’s enrollment period ended on January 31, 2023.
Aside from the DMC, other direct government payments, such as those from the Emergency Relief Program (ERP) and the Emergency Livestock Relief Program, are expected to be curtailed this year (ELRP). Ad hoc aid, which includes farm bill-designated disaster programmes, is estimated to pay out US$6.1 billion less in 2023, owing mostly to decreased ERP payments.
Because of the drop in government subsidies and milk collections, dairies are expected to have the greatest dollar loss in average net cash farm income (NCFI) of any farm company that specialises in animals or animal products. The average NCFI is expected to be $408,900 in 2023, a decrease of US$258,200 (-39%). Regionally, agricultural enterprises in the Fruitful Rim are expected to lose the most money (US$46,700), while those in the Northern Crescent are expected to lose the most money (29.9% ($28,200) per farm. Farms in both locations are expected to have greater production costs and lower cash revenues in 2023.
Feed expenditures are predicted to fall from US$76.5 billion to US$72.6 billion, as is fertiliser (US$42.1 billion against US$42.4 billion, but still much over the 2021 figure of US$29.5 billion). Fuel and oils are expected to dip to US$17 billion, down from US$20.1 billion, while electricity is expected to grow marginally to US$7.2 billion, up from US$7.03 billion. Production costs, including those linked with operator residences, are expected to rise by $18.2 billion to $459.9 billion.
