Saturday, May 18, 2024

2023 Arkansas net farm income down nearly $1B, but still higher than 2021

⋅ BY MARY HIGHTOWER ⋅
U of A SYSTEM DIVISION OF AGRICULTURE

Declines in crop and overall livestock receipts and direct government payments add up to a nearly $1 billion decline in Arkansas net farm income for 2023 from the previous year, the Rural and Farm Finance Policy Analysis Center said.

mississippi river at low levels
The shrinking Mississippi River has broader “beaches” as drought continues to plague its basin. taken near the Bridgeport exit of I-55 in West Memphis, Arkansas.  (Division of Agriculture photo.)

The center, working with agricultural economists from the University of Arkansas System Division of Agriculture, said in its “Fall 2023 Arkansas Farm Income Outlook” that Arkansas’ farm income totaled $3.3 billion.

“Arkansas 2023 net farm income is projected to decrease from the record set in 2022,” said Hunter Biram, extension economist with the Division of Agriculture.

The report said that total farm receipts declined $1.4 billion — with farm-related receipts offsetting a $1.5 billion decline in crop and livestock receipts — while production expenses decreased by $3 million and direct government payments fell by $60 million.

The decline in corn receipts is attributed to lower crop prices received despite seeing a 20 percent increase in planted acreage relative to 2022. Corn prices fell 28 percent to $4.75 from $6.65. Biram said the decline “is largely attributed to higher national planted acreage and weaker cash prices received at grain elevators near the Mississippi River driven by record-low river levels.

“Soybean receipts fell 25 percent on lower planted acreage and lower crop prices,” he said.  Cotton receipts fell 8 percent on lower planted acres despite relatively higher crop prices received compared to the 2022 harvest season, while rice receipts increased 11 percent on 330,000 more planted acres compared to 2022.”

Biram said government payments are expected to decline year-over-year from $460 million to $400 million due to Emergency Relief Program Phase 2 payments being $150 million less than ERP Phase 1 payments received in 2022.

“This is also despite Arkansas rice farmers receiving payments from the Rice Production Program, or RPP, which was authorized in the 2022 omnibus package,” Biram said.

Additionally, production expenses remained flat over 2022 despite key operating expenses such as seed, fertilizer, pesticides and fuel falling $177 million. Interest, labor, and rent to landlords increased by $143 million.

“This combination results in a 21 percent decrease in net farm income,” said Biram.

On the bright side

However, the good news is that “despite a decrease from 2022 to 2023, Arkansas net farm income is still above 2015-22 averages,” he said.

The report indicates that despite a decrease in 2023, Arkansas net farm income remains higher than levels seen in 2021. Arkansas is expected to see a 21 percent decline in net farm income, compared to a projected 23 percent decline in U.S. net farm income.

Other key findings from the report include:

  • Planted area of the state’s top seven crops, plus hay harvested, grew to 7.2 million acres in 2023. Soybeans, the state’s top field crop by area, saw a decrease in 2023 planted acres. Crop receipts for 2023 decline a combined $600 million.
  • Poultry and egg receipts decline a combined $1.1 billion in 2023, largely due to lower prices. Cattle receipts grow by $233 million, while hog receipts decline $9 million.
  • Egg receipts decline on lower prices which reflects the industry recovering following Highly Pathogenic Avian Influenza outbreak that affected 44.43 million birds in commercial egg operations, which reflects approximately 14.5 percent of Jan. 1 layer inventories.
  • Poultry production is 2.4 percent higher through August and the national composite broiler price is tracking 13.6 percent below 2022. Both lead to lower cash receipts in Arkansas.
  • Cattle receipts are higher on cyclically high prices following three consecutive years of contraction in the industry.
  • Fertilizer, feed and fuel expenses decrease by 0.03 percent in 2023, with a projected additional 6 percent decrease in 2024.

The fall 2023 farm income outlook is co-published by the University of Arkansas System Division of Agriculture and the RaFF at the University of Missouri, which provides objective policy analysis and informs decision-makers on issues affecting farm and rural finances. The center collaborates with a number of states to develop farm income projections with local expertise.

“Insights developed through our partnership with the University of Arkansas System Division of Agriculture help us better understand the uniqueness of farm income factors regionally,” said Scott Brown, interim director of RaFF. “State-level analyses like the Arkansas farm income report can help producers, policymakers and stakeholders alike be equipped with information to make sound decisions that impact agriculture.”

See the full report and data tables.


Mary Hightower is University of Arkansas Division of Agriculture communications director. She may be reached at mhightower@uaex.edu.

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