Agriculture markets are a roller coaster, and economists are telling producers to buckle up for the downhill ride as farm income is expected to decline in 2023.
The current outlook for the national and state economic trends was addressed by the University of Nebraska-Lincoln (UNL) Center for Agricultural Profitability (CAP) in a webinar titled “Nebraska Farm Income Update and Outlook.”
Dr. Scott Brown, interim director of the Rural and Farm Finance Policy Analysis Center (RaFF) and associate extension professor in agriculture and applied economics at the University of Missouri, presented an overview of national markets and commodity projections during the webinar March 30.
According to Brown, U.S. Department of Agriculture (USDA) receipts show record net farm income of $160 billion on the national level for 2022. This income was not shared equally around the nation, he noted.
For 2023, USDA projections reveal an overall decline to less than $140 billion of net farm income. However, Brown remained pragmatic about what the statistics reflect.
“That would be the third highest income that we’ve seen,” said Brown of the 2023 predictions.
Poor weather and world events greatly influenced agricultural exports. Looking ahead, these same elements will continue to be an issue. Brown mentioned the uncertainty surrounding the conflict between Russia and Ukraine. Additionally, more crops are expected to be pushed onto the global market from South America.
Input costs are a major battle for producers around the world. Production expenses are going to be stubbornly high, Brown said.
“Yes, I know fuel costs have been going down and fertilizer cost is starting to come down, but I still think we’re talking about those prices being well above where we started in 2020,” said Brown.
As expenses remain inflated and cash receipts trend downward, lower farm incomes will ensue on a national level.
Nebraska seems to have prematurely regressed before the rest of the nation, largely because of the drought. Brad Lubben, associate professor and extension agriculture policy specialist at UNL, shared reports from the USDA Economic Research Service (ERS) during the webinar. Farm income peaked in Nebraska in 2021, compared to the estimated national high of 2022 and predicted fallback to come in 2023.
“Here in Nebraska, it looks like 2023 might be relatively stable, but that’s only because we have already taken the pains, so to speak, in 2022 due to the obvious drought conditions,” Lubben said.
When analyzing previous data, it is important to note that the impact of the drought may not yet be fully realized. Cash receipts for 2022 may include crops from 2021 that were rolled into the 2022 fiscal year. This will also influence 2023 statistics.
Crop producers can expect relatively flat revenue in corn and soybeans, said Lubben. Wheat is expected to have strong growth, partly because 2021 was such a poor season for wheat producers.
Should weather conditions allow crop yields to return to trend-line levels, commodity prices in Nebraska will likely fall. The trend projection for the state shows a reduction in corn price receipts by $1.4 billion and soybean receipts by $400 million.
When you take into account current events, such as the war and export fluctuations, producers must also prepare for tight marketing and increased volatility of global markets.
Source: agupdate.com
Photo Credit: gettyimages-ben-goode
Categories: Nebraska, Business