US dairy farms face an unprecedented 81% income drop, with the broader farm economy under threat. Dive into the challenges and potential solutions for 2023 and beyond.
US Farm Income Faces Alarming Decline, Prompting Concerns for the Future
Dairy farms are expected to witness a significant 81% reduction in cash receipts, amounting to $12bn, with the Northern Crescent experiencing the most severe drop.
According to the USDA’s Economic Research Service (ERS), there’s an anticipated 20% average year-on-year decline in net cash farm income, marking the largest such decline since records began in 2010. The Northern Crescent, a major dairy-producing region, is predicted to see a 38% drop.
The broader metric of farm profitability, net farm income, is set to decrease by $42bn in 2023, translating to a 23% reduction from 2022 figures. This represents the most significant contraction in nominal terms and ranks third when adjusted for inflation.
Dairy farm income is projected to plummet by 81% or $12bn year-on-year, which is almost double the decline expected in the poultry (-43%) and hogs (-39%) sectors.
The US Senate Committee on Agriculture, Nutrition & Forestry has expressed concerns over this trend, attributing it to rising production costs and falling commodity prices. ERS data suggests a combined $23bn drop in cash receipts from crop and livestock sales this year, with $20bn due to price drops and less than $4bn due to production declines. The Committee highlighted that federal support could reduce this decline to $12bn, a 2% decrease from 2022.
Additionally, one-time programs like the Organic Dairy Marketing Assistance Program (ODMAP) might offer some relief, having already provided $104m to organic dairies affected by market fluctuations.
Producers’ Federation (NMPF) to modify the FMMO protein pricing formula.
Dairy producers are also urging the Food and Drug Administration to reconsider the labeling of dairy alternatives. Senators Tammy Baldwin and James E. Risch, among others, have expressed concerns over the use of dairy terms for non-dairy products.
What are your thoughts on the current state of the US farm economy? How do you think these challenges will impact consumers and the broader economy? Share your opinions and insights below.