The final tally of ag cash receipts demonstrates the strength of Kentucky agriculture, but that doesn’t mean farm families are getting rich.

Last December, during the Kentucky Farm Bureau (KFB) annual meeting, University of Kentucky (UK) Martin-Gatton College of Agriculture, Food and Environment ag economists presented their yearly outlook for farm commodities with a prediction of what the year’s cash receipt numbers may be.

Last month the final tally of the numbers was made public reinforcing what UK ag econ professors estimated, and then some.

According to information from the USDA, “Kentucky’s 2022 agricultural cash receipts totaled $8.3 billion, up from $6.9 billion in 2021 and a new record high.”

• In breaking down this total by sector, the USDA reported:
• The value of livestock cash receipts totaled $3.47 billion, up 26 percent from the previous year.
• Crop cash receipts in 2022 were $3.84 billion, up 14 percent from 2021. Kentucky ranks 24th nationally for all cash receipts.
• Corn leads cash receipts in Kentucky for the second straight year, with a 2022 value of $1.45 billion, up 14 percent from the previous year.
• Broilers moved up to the second position with cash receipts totaling $1.43 billion, up 39 percent from 2021.
• Soybeans ranked third with a total of $1.39 billion, up from $1.15 billion the previous year.
• Equine, stud fees, sheep, goats, and other livestock totaled $1.2 billion, up 10 percent from 2021.
• Cattle rounds out the top 5 with a value of $1.1 billion, an increase of 25 percent from the previous year.
• Rounding out the top 10 commodities are hay, eggs, tobacco, milk, and wheat, in that order. Cash receipts values for each of these commodities increased from 2021.
• Eggs had the largest increase, just over $110 million from the previous year.
• In addition to total cash receipts, corn, soybeans, broilers, cattle, and other livestock all reached record highs in 2022.

KFB President Mark Haney said the latest cash receipt information is indicative of the job farm families are doing every day on their farming operations.

“This record cash receipts number demonstrates the strength of our state’s agriculture industry and that is a direct result of the dedication we see from our farm families throughout the Commonwealth,” he said. “But, for those outside of the agriculture sector, it should be emphasized that record cash receipt numbers don’t equate to record net income.”

While the USDA report on ag cash receipts shows a record high, the agency’s Economic Research Service has a forecast much different when it comes to the profit farm families see when all the bills are paid, Haney emphasized.

Highlights from the Farm Income Forecast, indicate, “Net farm income, a broad measure of profits, is forecast at $141.3 billion in the calendar year 2023, a decrease of $41.7 billion (22.8 percent) relative to 2022 in nominal (not adjusted for inflation) dollars.”

Other statistical information from the forecast released on August 31, 2023, included:

• After adjusting for inflation, net farm income is forecast to decrease $48.0 billion (25.4 percent) in 2023 relative to 2022.
• Net cash farm income is forecast at $148.6 billion in 2023, a decrease of $53.6 billion (26.5 percent) relative to 2022. When adjusted for inflation, 2023 net cash farm income is forecast to decrease by $60.5 billion (28.9 percent) from a record high of $209.1 billion in 2022.
• Cash receipts from the sale of agricultural commodities are forecast to decrease by $23.0 billion (4.3 percent, in nominal terms) from a record high of $536.6 billion in 2022 to $513.6 billion in 2023.
• Total crop receipts are expected to decrease by $11.2 billion (4.0 percent) from 2022, led by lower receipts for corn and soybeans.
• Total animal/animal product receipts are expected to decrease by $11.9 billion (4.6 percent), following declines in receipts for milk, broilers, eggs, and hogs.

Even with these less-than-stellar net farm income numbers, it’s important to note that, net farm income in 2023 would be 22.6 percent above its 20-year average (2003–22) of $115.2 billion in inflation-adjusted dollars, according to the USDA.

Daniel Munch an economist with the American Farm Bureau Federation notes in a recent Market Intel column that 2022 net farm income numbers were not finalized until August 2023 and were adjusted upward over $20 billion in the eight months since the year ended.

“During this time USDA is digesting new information and data as it becomes available, shifting calculations from estimates to actual values. This means there is still much variability in 2023 net farm income,” he wrote. “At the very least, these estimates show the relationship between, on average, falling commodity prices and rising production costs and the ultimate impact on farmers’ bottom lines. Combined with weather uncertainty and a high cost of capital to operate their businesses, farmers and ranchers will be forced to adapt as they always have.”

Haney said that as a new Farm Bill awaits Congressional action, it’s important to remain vigilant in advocacy efforts as farm families look to “adapt” to lower net incomes.

“As farmers, we continually make adjustments from production methods to financial strategies on a year-to-year basis to remain in business," he said. "And remaining in business is critical to the well-being of all consumers. A solid Farm Bill can help us mitigate some of the belt-tightening we will have to do as net farm income drops and as we continue to ensure the value of our crops and livestock remains the best in the world.”