USDA's Economic Research Service (ERS) reports that its 2013 net farm income forecast of $128.2 billion, after adjusting for inflation would be the highest since 1973. ERS explains that a return to trend yields would result in record crop production levels as well as substantial crop inventories at the end of the year. "This would lead to higher net farm income since this measure goes beyond cash income to include the value of inventory change and other noncash items," ERS elaborates.
ERS forecasts net cash income at $123.5 billion for 2013, down nearly 9% from 2012. This measures the difference between cash expenses and the combination of commodities sold during the calendar year plus other sources of farm income. If realized, this would be just the fourth time net cash income (adjusted for inflation) has topped $100 billion since 1973.
On the expense front, ERS projects a $19.2 billion increase in total expenses for 2013, continuing the trend of big year-over-year movement since 2002. Expenses are expected to be record-high, as "rent, labor, and feed are the expense items expected to increase the most in 2013," according to ERS.
ERS says farm sector assets, debt and equity are all expected to increase in 2013, but as has been the trend, increases in farm asset value are expected to surpass those increases in farm debt, mainly due to farm real estate. ERS continues, "Confirming the strength of the farm sector's solvency, both the debt-to-asset ratio and debt-to-equity ratio are expected to reach historic lows."
ERS projects that median total farm household income will increase by 1.2% in 2012 to $57,723. This is expected to rise another 1.9% in 2013 to $58,845. But ERS notes that "given the broad USDA definition of a farm, many farms are not profitable even in the best farm income years. Despite high prices for many crops, 2012 was no exception, with median farm income projected to be -$2,799."
Median off-farm income is expected to rise 3.4% in 2012 to $55,229 and by another 3.9% in 2013 to $57,378. Get more details and charts here.