The U.S. Department of Agriculture’s (USDA) latest Farm Income Forecast Report shows a significant drop between 2022 and 2023.

The picture is a little brighter than the August predictions, but not much, according to American Farm Bureau Federation (AFBF) Economist Danny Munch.

“In the August reports, USDA forecasted that farm income from 2022 would drop 23%, a $41 billion drop from 2022. In this new November report, they adjusted that number—$41 billion—to $31.8 billion, which is a 17% drop from 2022,” Munch said. “In total, that would give you a total net farm income of $151 billion for 2023 compared to the $141 billion estimated previously in August.”

Lower direct government payments and higher production expenses are contributing factors to the income forecast.

“The most significant revisions are attributable to lower production expenses compared to what they estimated in August,” he said. “There’s still a $14.9 billion expected increase in what farmers are paying for production expenses, which is about 4%. But that’s 7% lower than what they forecasted in the August release.”

Munch noted there is some good news about the forecast, though overall it is a mixed bag.

“For all categories except fuels and oils, electricity and interest expenses, they adjusted their numbers downward. Things like fertilizer, pesticides, seeds, those all saw decreases from what they estimated that farmers will be paying,” he said. “Electricity, fuels, oils, interest expenses all saw increases. So, those are things farmers saw upward adjustments and are going to pay more for in 2023 than they estimated previously.”