Surge in Net Farm Income

The USDA Economic Research Service (ERS) reports net farm income in Nebraska for 2023 surged to a record-setting $9.27 billion, $2.67 billion or 40 percent more than 2022 (Figure 1). Income last year exceeded the previous top of $8.044 billion in 2021 by more than $1 billion. The ERS estimate came as a surprise. Agricultural economists at the University of Nebraska and the University of Missouri pegged last year's income at around $7 billion. This author suggested net income would be lower compared to 2022, when it was $6.5 billion, but higher than the 10-year average of $5.0 billion. So, an income level above $9 billion comes as a bit of a shock. The 2023 increase means farm income in Nebraska has grown in five of the last six years. Nebraska's increase in percentage terms was second only to Oklahoma which recorded a 44 percent increase. And Nebraska was only one of six states which experienced income growth in 2023 (Figure 2). Nationally, net farm income declined 20 percent.

FIGURE 1. NEBRASKA NET FARM INCOME

Source: USDA Economic Research Service

FIGURE 2. PERCENT CHANGE IN FARM INCOME BY STATE

Source: John Newton@New10_AgEcon

The state's livestock sector powered last year's income surge. Livestock receipts surpassed $18 billion for the first time last year, more than $2 billion above 2022. Record cattle prices no doubt contributed to the increase. Crop and livestock receipts together hit a record $32.1 billion, the second consecutive year total crop and livestock receipts exceeded $32 billion. Nebraska's receipts were the fourth-highest in the nation following California, Iowa, and Texas.

Lower feed expenses, off 24 percent, helped boost livestock producers' profitability. Expenditures for other inputs such as fertilizer, electricity, fuel, and pesticides were up one percent. In all, expenses were up about three percent last year, considerably less than the increases experienced in 2021 and 2022. Increased government payments also contributed to last year's increase. Government payments rose $65 million to $624 million.

The ERS projects U.S. net farm income will decline four percent this year. Forecasts by economists at the Universities of Nebraska and Missouri last spring projected Nebraska net farm income would settle around $6 billion. Updated estimates should be forthcoming this fall. Corn and soybean production will be larger this year, but crop prices will be lower meaning crop receipts will likely be lower too. Cattle prices are still high, but this year's calf crop will be smaller. Expenses have softened, albeit slightly. It's hard to imagine this year's net farm income can match last year's, but no one imagined it would exceed $9 billion last year either.