Top 10 Ag Stories of 2023: No. 7
The High Cost of Some Inputs Fall, But So Does Farm Income
Editor's Note: Each year DTN publishes our choices for the Top 10 ag news stories of the year as selected by DTN analysts, editors and reporters. This year, we're counting them down from Dec. 18 to Dec. 29. On Dec. 31, we will look at some of the runners-up for this year. Today, we continue the countdown with No. 7: How lower input prices still didn't help the bottom line for farmers, as their income fell, too.
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OMAHA (DTN) -- There was good news and bad news for crop producers in 2023. The good news was that some major crop inputs, like fertilizer, saw large price declines during 2023. The bad news was that farm income is projected to be down considerably for 2023 as well.
First the good news.
Fertilizer represents about a quarter of total crop input costs for corn producers. In 2023, nutrients saw steady price declines.
According to retail fertilizer prices tracked by DTN, the eight major fertilizers have weakened anywhere from 14% to 42% from year-ago levels.
There were several reasons given for the fall in fertilizer prices during 2023, according to fertilizer retailers and analysts.
Several supply issues across the world lessened nutrient supplies in 2021 and 2022. These included: high input prices for fertilizer manufacturers, weather challenges, import tariff fights and the Russia-Ukraine war. All these issues then combined to cause global fertilizer prices to skyrocket higher in 2022. World fertilizer usage was cut as farmers struggled with nutrient affordability.
By the end of 2022 into 2023, many of these various supply issues started to work themselves out. More fertilizer made it to market, leading fertilizer prices to finally decline.
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The outlook for fertilizer in 2024 is for continued better affordability levels which will allow farmers to ramp up their usage.
To see more about the Global Fertilizer Outlook for 2024, find out more about nitrogen here: (https://www.dtnpf.com/…), phosphorous here: (https://www.dtnpf.com/…) and potash here: (https://www.dtnpf.com/…).
THE BAD NEWS: FARM INCOME LOWER
Now the bad news. Farm income will end up lower in 2023 than in 2022.
USDA estimates farmers will earn $151.1 billion in net farm income in 2023, 17% below last year.
The above-average total tastes a little bitter, especially considering corn and soybean crops were the most expensive growers had ever planted.
"When grouped by commodity specialization, all farm business specializations, except cattle/calves, wheat and specialty crops, are forecast to see lower average net cash income in 2023. Farms specializing in dairy are expected to see the largest decline relative to 2022," the USDA report stated.
Yet, USDA's forecast at the end of November was higher than previous estimates, reflecting higher-than-expected yields after this summer's drought conditions and commodity prices that gave farmers many profitable opportunities to sell.
The farm income story -- lower than last year, but higher than average -- reflects difficulties mounting in today's environment. Many economists suggest the overall farm economy is moving into another plateau, similar to the aftermath of the ethanol boom in 2013, with commodity prices remaining around the break-even level.
One thing USDA does not consider in its income forecasting is crop insurance payments, which are likely to be higher than in recent years, given the spring crop insurance prices of $5.91 per bushel of corn and $13.76 per bushel of soybeans. Analysis from the University of Illinois shows farmers with 85% revenue protection policies will likely get a payment without having to show any yield loss, reflecting the magnitude of price changes over the growing season.
But many with lower levels of coverage will receive payments, too, especially in the hardest-hit drought areas.
To see more about our DTN countdown, see the Editors' Notebook blog at https://www.dtnpf.com/….
To see the other top stories of the year:
No. 10: "Livestock Producers Lean Into USDA's Livestock Risk Protection Coverage (LRP)," https://www.dtnpf.com/…
No. 9: "Supreme Court Rules on Two Major Ag Cases," https://www.dtnpf.com/…
No. 8: " EPA's Plan to Protect Endangered Species From Herbicides Draws Criticism," https://www.dtnpf.com/….
You can find No. 6 in DTN's Top 10 list on Dec. 22.
DTN Farm Business Editor Katie Dehlinger contributed to this article.
Russ Quinn can be reached at Russ.Quinn@dtn.com
Follow him on X, formerly known as Twitter, @RussQuinnDTN
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