Economic Tidbits

Net Farm Income Approaches $8 Billion 

Nebraska net farm income in 2023 will be $7.8 billion as projected by the Rural and Farm Finance Policy Analysis Center at the University of Missouri in collaboration with the Center for Agricultural Profitability at the University of Nebraska. If realized, it would mark an 18 percent increase over last year and would be the second-highest net farm income on record for the state. More details on the estimates can be found here.

Figure 1 shows a “waterfall” chart with details of changes in components of net farm income since 2021. The estimated changes for 2023 begin in the middle of the chart with last year’s income of $6.6 billion. Changes this year in crop receipts (-$2.2 billion) and livestock receipts (+$2.2 billion) are projected to offset each other. This year’s larger crop production is offset by lower prices leading to lower receipts. And despite fewer cattle numbers, higher cattle prices are expected to result in greater livestock receipts, up 18 percent compared to 2022.

On the other side of the ledger, expenses are higher, up almost $2.0 billion (which is shown as a negative against income on the chart). All other changes are estimated to add $3.2 billion towards income. This includes government assistance—conservation programs and disaster assistance—projected to be somewhat higher compared to last year. Commodity program payments will be almost non-existent. It also includes a projected recovery in ending year inventories and values which is a positive contributor to net income. Crop inventories were lower last year due to the drought and are expected to recover this year with larger crops.

Dr. Brad Lubben, agricultural economist at the University of Nebraska, commented during a webinar regarding the latest income forecasts that, “The one thing we do know is that we will be surprised, and something will happen.” And while Lubben’s comment concerned long-term trends in farm income, both long and short-term forecasts are fraught with uncertainty. Yet forecasts do provide a sense of the state of the farm economy. The positive news from the latest forecasts is that Nebraska agricultural producers remain on solid financial footing.

FIGURE 1. CHANGES IN COMPONENTS OF NET FARM INCOME

Source: Kruse, J., Lubben, B., Brunkow, T., Dennis, E,. McClure, G., Parsons, J., Thompson, E., Van Tassell, L., Walters. C. & T. Washburn. October 2023. Fall 2023 Nebraska Farm Income Outlook. RaFF Report #06-2023.

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