Net farm income is forecast to be $131 billion in 2013, up 15.1% from 2012's estimate of $113.8 billion, the USDA Economic Research Service said Tuesday.
After adjusting for inflation, the net farm income is expected to be the highest since 1973, largely reflecting several expected higher year-end crop inventories as a result of the record corn harvest, USDA said.
Net cash income—which measures the difference between cash expenses and the combination of commodities sold during the calendar year plus other sources of farm income—is forecast at $129.7 billion, down just over 3% from 2012. Even so, 2013's forecast would be the fourth time net cash income, after adjusting for inflation, has exceeded $100 billion since 1973.
The latest estimate is nearly $9 billion higher than August estimates indicated.
"If we look at where we are on soybean receipts, for example, we're up about $2 billion over what we were anticipating back in August. Prices have been strong, cattle receipts are up about a billion, some of the feed expenses are down because of the falling feed prices," USDA's Chief Economist Joe Glauber explained in an agency interview.
In addition, the value of livestock production is expected to increase by 6% in 2013, as is the value of crop production. Increases in farm asset values are expected to continue to exceed increases in farm debt, leading to another new record high for farm equity, USDA projects. Farm financial risk indicators are expected to continue at historically low levels.
The projected $10.9-billion increase in total expenses in 2013, to $352 billion, continues a string of year-to-year increases (except for 2009) that have taken place since 2002. In both nominal and inflation-adjusted dollars, 2013 production expenses are expected to be the highest on record.
According to the USDA, labor and rent are the expense items expected to increase the most in 2013, while producers are expected to pay less for fuel and fertilizer.
Farm sector assets, debt, and equity are all forecast to increase in 2013. As in the last several years, increases in farm asset value are expected to exceed increases in farm debt, with farm real estate the main driving force. 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.
View the USDA's complete farm sector overview.