The Agriculture Department’s Economic Research Service today, Feb. 7, forecasted that inflation-adjusted U.S. net cash farm income (NCFI) — gross cash income minus cash expenses — will decrease by $44.7 billion to $150.6 billion in 2023, but still remain above 20-year averages.

This marks a 22.9% decline after reaching a forecast record high of $195.3 billion in 2022. U.S. net farm income (NFI) is forecast to decrease by $30.5 billion (18.2%) to $136.9 billion in 2023 after reaching a forecast of $167.3 billion in 2022, its highest level since 1973 after adjusting for inflation. (Calculations include rounding.) Net farm income is a broad measure of farm sector profitability that incorporates noncash items, including changes in inventories, economic depreciation, and gross imputed rental income.

If these forecasts are realized, both NCFI and NFI would remain above their respective 20-year averages (2002-2021) in 2023. Underlying these forecasts, cash receipts for farm commodities are projected to fall by $38.9 billion (7%) from 2022 to $519.8 billion in 2023. During the same period, production expenses are expected to increase by $5.7 billion (1.3%) to $459.5 billion. Additionally, direct government payments to farmers are projected to fall by $5.8 billion (36.2%) from 2022 levels to $10.2 billion in 2023, largely because of anticipated lower payments from supplemental and ad hoc disaster assistance programs.