Idaho net farm income dropped by $400 million in 2023

By Sean Ellis

Idaho Farm Bureau Federation

POCATELLO – Total net farm income in Idaho dropped by an estimated $400 million in 2023, an 11 percent decline compared with 2022.

While total farm revenue in the state last year came close to matching the record set in 2022, total farm and ranch expenses in Idaho hit another record in 2023.

That included a huge increase in interest expenses paid by the state’s almost 25,000 farms and ranches.

Net farm income – revenue minus costs – is the farmer or rancher’s bottom line.

Idaho set a record for total net farm income in 2022, at $4.2 billion. Increased production expenses, coupled with slightly lower total revenue, resulted in an 11 percent decrease in total net farm income in the state in 2023.

The U of I report estimates Idaho net farm income in 2023 will total $3.8 billion.

“Increased input costs, particularly interest expenses, led to a moderate decline in net farm income,” states the University of Idaho’s annual, The Financial Condition of Idaho Agriculture” report for 2023.

The U.S. Department of Agriculture is forecasting total U.S. net farm income will be down about 17 percent in 2023.

Highlights of “The Financial Condition of Idaho Agriculture Report: 2023” were presented to Idaho lawmakers Jan. 4 by Brett Wilder, one of the U of I agricultural economists who authored it.

The report estimates Idaho farm-gate receipts – this is what the farmer or rancher receives for their commodity – totaled $11.2 billion in calendar year 2023, just 1 percent shy of the record $11.3 billion recorded in 2022.

But total farm production expenses continued to climb last year, totaling an estimated $8.55 billion, 4 percent more than the record $8.24 billion in 2022.

The higher farm production expenses were largely a result of a 42 percent increase in total interest payments paid by Idaho farmers and ranchers in 2023, Wilder told legislators.

Wilder said U of I economists “expect Idaho farmers and ranchers to spend about $714 million on interest in 2023 ... Obviously, we have a lot more interest expense on the farm.”

Direct federal government payments to Idaho farmers and ranchers decreased 22 percent in 2023, totaling $153 million. Idaho agricultural producers only received about 1 percent of total government payments to U.S. ag producers in 2023.

Most of those government payments in Idaho came through the Dairy Margin Coverage Program, which is an index that pays based on expected margins to dairy producers. Those 2023 payments reflected the tough year that Idaho dairy operators suffered through in 2023, as milk prices fell significantly from the record prices recorded in 2022.

“For the first time in the history of that program, it paid every month of the year,” Wilder said. “Dairymen have tighter margins.”

Dairy is still the state’s No. 1 ag commodity in terms of total farm-gate revenue but total milk revenues in Idaho in 2023 came in at an estimated $3.5 billion, which represents an 18 percent drop from the record $4.3 billion recorded in 2022.

Total milk production in Idaho was up 1.5 percent in 2023 but “softer year-over-year milk prices led to decreased milk revenues … in 2023,” the Financial Condition of Idaho Agriculture (FCIA) report states.

Total farm-gate revenue from the state’s cattle and calves industry is estimated at a record $2.66 billion in 2023, 18 percent higher than the previous record set in 2022. Most of the increase is attributed to record beef cattle prices.

Total revenue from Idaho’s top crop, potatoes, is estimated at a record $1.34 billion in 2023, a 14 percent increase over the previous record of $1.18 billion set in 2022. Potato acres in Idaho increased 12 percent in 2023 and yields were up significantly compared to 2022.

This resulted in potato production in Idaho increasing 18 percent in 2023 and a new record for farm-gate revenue for the state’s iconic crop despite much lower farm-level potato prices for much of the calendar year.

According to the FCIA report, “The expectation of a second consecutive year of record-high receipts is driven by high old-crop cash prices, higher reported contract prices for 2023, and higher yields, despite lower prices for open new-crop potatoes.”

Wheat in 2023 took back the No. 4 spot from hay among Idaho ag commodities when it comes to total revenue. Wheat revenue in Idaho totaled an estimated $685 million last year, an 8 percent increase over 2022.

According to the FCIA report, wheat acres and yields in Idaho declined in 2023, leading to an overall production decrease of 5 percent. However, “Higher projected year-over-year cash receipts are related primarily to the timing of sales as reported by USDA.”

Total farm-gate revenue from Idaho’s hay crop is estimated to have declined 14 percent in 2023, to $670 million. The state’s hay crop in 2023 was 3 percent larger than it was in 2022 and the revenue decline is due to a 12 percent decrease in prices.

The state’s sugar beet growers are estimated to have brought in a record $504 million in farm-gate revenue in 2023, 25 percent more than the previous record of $404 million set in 2022.

Sugar beet acreage, yields and prices were all higher in 2023.

The state’s barley farmers are projected to have brought in a record $468 million in revenue in 2023, 17 percent higher than the previous record of $401 million they received in 2022.

The barley revenue record is attributed to slightly higher yields and a 19 percent increase in prices.

During his FCIA presentation to lawmakers, Wilder pointed out that while Idaho’s economy is small overall compared to other states, its agricultural economy is large.

When it comes to a state’s gross domestic product from agriculture as a percentage of the state’s overall economy, Idaho ranks No. 5 in the nation, behind only South Dakota, North Dakota, Iowa and Nebraska.  

According to estimates by U of I economists, agriculture in Idaho directly and indirectly accounts for about 17 percent of the state’s total sales and 13 percent of the state’s total gross domestic product.