Farm Business Income
Suggested citation for linking to this discussion:
U.S. Department of Agriculture, Economic Research Service. Farm Sector Income & Finances: Farm Business Income, November 30, 2023.
Average Net Cash Farm Income for U.S. Farm Businesses Forecast Down in 2023
Farm businesses are farms with annual gross cash farm income (GCFI)—annual income before expenses—of at least $350,000, or operations with less than $350,000 in annual gross cash farm income but that report farming as the operator's primary occupation. Farm businesses account for about half of all U.S. farms, but they contribute more than 90 percent of value of production and hold most of its assets and debt.
Average net cash farm income (NCFI) for farm businesses* is forecast at $99,300 for the calendar year 2023, down 8.6 percent from 2022 in nominal terms. Net cash farm income is cash receipts from farming as well as farm-related income, including Government payments, minus cash expenses. Lower NCFI could mean less cash available to reduce debt, pay taxes, cover family living expenses, and invest. NCFI is not a comprehensive measure of profitability because it does not account for changes in noncash income, including adjustments in farm inventory, accounts payable, accounts receivable, the imputed rental value of operator dwellings, and capital consumption.
The average NCFI forecast for 2023 is down across most farming regions and commodity specializations**. In 2023, farm businesses specializing in dairy are forecast to see the largest dollar and percent decrease in average NCFI. Among the nine USDA, ERS resource regions (see the FAQ on ERS resource regions), farm businesses in the Northern Crescent region are forecast to have the largest dollar and percent decrease in average NCFI. See data tables on farm business average net cash income below:
- Farm-level average net cash income by farm typology and sales class
- Farm business average net cash income by commodity specialization and region
Average Net Cash Farm Income for Most Types of Farm Businesses by Commodity Specialization is Forecast To Decline
Farm businesses in four out of six commodity specializations are forecast to have a decrease in average NCFI in 2023. Farm businesses specializing in cotton are expected to see the largest dollar ($26,500) decrease with average NCFI forecast at $317,400 in 2023. Farm businesses specializing in corn are expected to see the largest percent (9.2) decrease with average NCFI forecast at $228,600 in 2023. Average NCFI for farm businesses specializing in wheat and specialty crops is forecast to increase in 2023.
| Farm specialization | Average NCFI, 2023F | Change in average NCFI, 2022–2023F |
|---|---|---|
| Dollars (per farm) | Percent | |
| Cotton | 317,400 | –8 |
| Corn | 228,600 | –9 |
| Wheat | 138,300 | +9 |
| Soybeans | 115,900 | –4 |
| Specialty crops 1/ | 245,400 | +4 |
| Other crops | 84,600 | –0 |
| F = forecast. NCFI = net cash farm income. 1/ Specialty crops include fruit and tree nuts, vegetables, and nursery/greenhouse. Source: USDA, Economic Research Service, Farm Income and Wealth Statistics data product, Farm business average net cash income by commodity specialization and region. Data as of November 30, 2023. |
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For all types of farm businesses specializing in animals/animal products except cattle and calves, average NCFI is forecast to decrease in 2023 relative to 2022. For those specializing in cattle and calves, average NCFI is forecast to increase $10,600, or 47.5 percent, compared with 2022 levels to $32,900 in 2023. This projected increase follows the forecast for higher cattle and calf receipts in 2023. For farm businesses not specializing in cattle and calves, lower cash receipts and higher production expenses are expected to contribute to a large decline in average NCFI in 2023. Farm businesses specializing in dairy are forecast to see the largest dollar ($284,000) and percent (58.3) decrease in average NCFI as milk cash receipts are forecast to fall in 2023.
| Farm specialization | Average NCFI, 2023F | Change in average NCFI, 2022–2023F |
|---|---|---|
| Dollars (per farm) | Percent | |
| Dairy | 203,000 | –58 |
| Hogs | 224,800 | –37 |
| Poultry | 70,500 | –36 |
| Cattle/calves | 32,900 | +48 |
| F = forecast. NCFI = net cash farm income; F = forecast. Source: USDA, Economic Research Service, Farm Income and Wealth Statistics data product, Farm business average net cash income by commodity specialization and region. Data as of November 30, 2023. |
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Average Net Cash Farm Income is Forecast To Decrease in Many Regions
Regional performance of farm businesses can vary considerably because of the heavy geographic concentration of certain production specialties. Six out of nine USDA, ERS Farm Resource Regions are expected to see a decrease in average net cash farm income in 2023 compared with 2022. Farm businesses in the Northern Crescent region are forecast to see the largest dollar ($25,300) and percentage (26.3) decrease in average NCFI per farm following lower cash receipts, particularly for dairy. Eastern Uplands is forecast to see the largest dollar ($3,500) and percent increase (8.5) in average NCFI because of an increase in cattle and calves cash receipts. Average NCFI for farm businesses in the Northern Great Plains and Mississippi Portal is forecast to remain relatively unchanged from 2022.
*Farm businesses are defined as operations with gross cash farm income of more than $350,000 (labeled "commercial") or smaller operations where farming is reported as the operator's primary occupation (labeled "intermediate"). USDA Agricultural Resource Management Survey data for 2022 indicate that 11.9 percent of U.S. farms are commercial and 36.1 percent are intermediate. Residence farms comprise the remaining 52.0 percent of operations; these are small farms with operators whose primary occupation is something other than farming.
**Commodity specialization is determined by a farm business having at least 50 percent of the value of production from a particular commodity. Farm businesses often produce multiple commodities, so average net cash farm income statistics should not be interpreted as resulting solely from the production and sale of the commodity highlighted as the specialization.