While America’s families continue to deal with record-high grocery prices, farm families can expect to see a drop in income in 2023. American Farm Bureau Federation economists analyzed USDA’s Farm Sector Income Forecast in their latest Market Intel report. U.S. net farm income is forecast to fall almost 16% from last year, while costs are expected to increase more than 4%, on top of a record increase in production expenses last year.

Increased operating costs, lower prices for livestock and crops, and the end of pandemic-related assistance are among the factors that will contribute to a loss in farm income, down to $136.9 billion. While fuel and fertilizer costs are expected to decline somewhat from record highs, marketing, storage and transportation costs are forecast to increase 11%. Labor costs are projected to increase 7%.

“The farm income forecast is a stark reminder that America’s farmers and ranchers are not reaping big benefits from higher prices at the grocery store,” said AFBF President Zippy Duvall. “Although some commodity prices are rising, farmers are being hit by circumstances beyond their control, from the cost of supplies and labor to drought and avian influenza. That’s why the farm bill is so important and must be passed this year. Farm bill programs enable farmers to manage the risk and weather the storm of challenges to continue stocking the pantries of America’s families.”

Adding to the challenges, interest rates are rising, and farm sector debt is projected to increase $31.9 billion to a record $535 billion. According to the Market Intel, “Nearly 70% of farm debt is in the form of real estate debt, for the land to grow crops and raise livestock. Real estate debt is projected to increase $26.79 billion to a record-high $375.8 billion, largely due to an increase in land values across the country. Non-real estate debt, or debt for purchases of things like equipment, machinery, feed and livestock, is projected to increase by $4.4 billion to a record $159.1 billion.”

In Arizona, agriculture is facing an added layer of challenges as it relates to the state’s new egg rule, reflecting hardship as well for the consumer. Under a rule proposed by the Arizona Department of Agriculture and approved by then-Governor Doug Ducey, beginning January 1 of this year, all eggs purchased within the state of Arizona must come from cage-free egg producers. This means that it’s illegal for stores in Arizona to sell anything other than cage-free eggs. There is a phase-in period, but essentially, if you are a buyer for a major grocery store, you now must purchase only eggs from cage-free producers.

For several years now, Arizona Farm Bureau has fought this restriction, which is against the policy established by our farmer and rancher delegation. And one of the main drivers of the organization’s opposition was the potential impact that production restrictions like this will have on Arizona’s ability to source affordable eggs and for farmers, the freedom to farm.

When the cage-free egg rules were being debated before the Governor’s Regulatory Rulemaking Council, Arizona Farm Bureau warned of the potential supply and cost impacts that it could have. “In approving this rule, the State essentially sentenced Arizona’s families to more expensive, less accessible eggs,” said Chelsea McGuire, Government Relations Director at AZFB. “Other states who adopted similar rules experienced significant challenges sourcing eggs, and saw significant increases in egg prices,” McGuire explained. “We did not want Arizona to become a cautionary tale of a state that adopted food production policy without a basis in sound science or public health, to the detriment of our consumers and families.”

So amid falling farm income and high food prices, Americans, along with farmers and ranchers, will have to plan and prepare more than ever before in the coming year.