(The Center Square) – Missouri farmers will have a projected decrease in net income of 11% in 2023, according to a University of Missouri analysis.
After a record-setting net income for Missouri farmers in 2022, declining crop receipts and “stubborn production expenses” are leading to a projected decrease of $530 million this year, the Rural and Farm Finance Policy Analysis Center at the university is reporting. The organization’s farm income report provides insights into the factors affecting income, such as farm receipts, production expenses and government payments.
The report stated net farm income in Missouri was $4.96 billion in 2022 and is projected to be approximately $4.43 billion this year. Missouri’s net farm income averages $3.52 billion across the 10-year baseline, according to the report.
While Missouri’s projected decrease of 11% is concerning, it’s far less than the 23% decrease in net farm income nationally.
“Many of the factors that pushed prices of agricultural commodities to record or near-record levels in 2022 have reversed, or at least moderated, in 2023,” the report said. “World grain production is up this year, central banks have tightened monetary policy and some input costs have receded. With the exception of cattle, prices for most U.S. farm products have declined in 2023.”
The report found receipts for all Missouri commodities in 2022 was $15.2 billion and this year’s projection is $14.4 billion. Livestock receipts will increase slightly in 2023. Strong cattle prices will result in a $550 million increase, but hog, dairy and poultry declines will offset the livestock gains.
“Drought has reduced cattle numbers, pushing up prices for fed and feeder cattle and reaching a peak in 2025,” the report said. “Projected U.S. pork production remains in a narrow range between 2022 and 2025, and rising poultry production and domestic use moderates the decline in overall U.S. meat at poultry consumption in 2023.”
Approximately 9% of western and central Missouri remains in extreme drought, according to the U.S. Drought Monitor. An additional 18.4% of the state is in severe drought and 31.7% is experiencing moderate drought. More than 26% of the state is experiencing abnormally dry conditions.
“Weather is another factor that has influenced the reduction in crop yields and cattle inventory in many parts of Missouri,” Scott Brown, interim director of the center, said in a statement announcing the report. “And that has led to the projection of lower cash receipts in 2023.”
It estimated interest payments will increase from $912 million in 2022 to more than $1 billion for Missouri farmers. Government payments are projected to increase $134.6 million in 2023 with the largest increase in supplemental and ad hoc disaster assistance.
The value of all land and buildings will increase to an average of $4,500 per acre, up from $4,150 last year.