The USDA released its August Farm Income Forecast for 2023 and shows farm incomes going lower. Chad Smith has more on the numbers.
Smith: The USDA says farm incomes are lower than they expected earlier this year. Danny Munch, an economist with the American Farm Bureau Federation talks about what the new farm income forecast says about the farm economy.
Munch: U.S. net farm income is currently forecast at $141 billion. That's down almost a quarter, 23 percent, from last year, which was $183 billion. And that's compared to a 16 percent decline that they originally estimated in February. That $41 billion decline that they're estimating erases a lot of the gains between 2021 and 2022, so revenue is expected to be down across the board.
Smith: Munch says nearly all sectors of the farm economy are projected to decrease.
Munch: The largest decrease in net farm income is tied to a projected fall on cash receipts for livestock, mainly due to lower prices for all commodities except for turkey and cattle. The value of livestock production is expected to decrease about five percent, which is about $12 billion. On the crop side, it's a similar story. They expect crop sales to be down ten percent for corn, $8.4 billion, soybeans to be down 8.6 percent to $5.4 billion. You also have production expenses continue to tick up, feed costs are up three percent, labor up five percent, and marketing costs expected up five percent.
Smith: He also said interest expenses, or the cost of capital, are almost 40 percent above last year. Munch says farmers and ranchers should make a plan now for how to weather these lower revenues.
Munch: Take advantage of risk management options available to you. This can include things offered through the federal crop insurance program available for lots of crops, as well as any of the farm bill commodity programs like Dairy Margin Coverage. For those who don't currently have risk management options in place because maybe there aren't crop insurance programs for that crop or they don't really fit your operation type, this is time to engage with your Farm Bureau and your elected officials. We're in the middle of farm bill conversations. We want to make sure that the farm bill gets passed, and that it's comprehensive, and that there's ways for farmers to hedge against revenue declines like this, regardless of what type of crops that they grow.
Smith: Chad Smith, Washington.