From agweb.com:
Following a handful of turbulent years that included a trade war, pandemic, rapid inflation, rising interest rates, a supply chain meltdown and high input costs, U.S. agriculture is hoping to find softer soil as it prepares a march through mid-decade. Here are the biggest factors to watch as 2023 comes to a close.
1. 2023 FARM INCOME
The ag economy is lukewarm, and the industry is watching to see what could trigger the financial trends of 2024.
“It’s almost impossible to repeat the level of farm income that we had in ’22,” says Jackson Tackach, chief economist with Farmer Mac. “We’re starting to really dial into what ’23 looks like, and even starting to get a good picture of 2024.”
USDA revised its net farm income forecast in August, now calling for a decline of 23% in farm income this year to $141.3 billion. That’s a drop of $41.7 billion versus last year, but it’s still the third-best year on record.
“You have to remember it’s coming down from a very large number of $183 billion in 2022,” says Michael Langemeier, associate director at the Center for Commercial Agriculture at Purdue. “Yes, it’s still a big drop, but we still have relatively strong net farm income compared with the average since 2007, which was the start of the ethanol boom.”
The challenge in 2023 has been production expenses. USDA says expenses are likely to be $458 billion, which is an almost $30 billion increase and up 7% year over year.
“Aside from fertilizer, all your other input costs are probably either stable or increasing,” says Tony Jesina, vice president of insurance at Farm Credit Services of America. “Cash rents haven’t come down yet, seed prices rarely come down, interest rates are up and family living expenses are probably not going to come down given what we’re seeing for inflation.”