Idaho agriculture overcame a struggling dairy market to record a second consecutive year of stellar cash receipts in 2023, propelled by record values of four of the state’s major crops, according to a new University of Idaho economic report. Idaho agricultural cash receipts for the year totaled $11.157 billion, down by just one percent from the record-high number food producers celebrated in 2022, according to “The Financial Condition of Idaho Agriculture: 2023” by U of I agricultural economists Brett Wilder and Xiaoxue “Rita” Du.
The 2023 report concludes the state’s farmers brought in record revenue from sugar beets, up by 25-percent; potatoes, up by 14-percent; cattle and calves, up by 18-percent; and barley, up by 17-percent.
The U of I economists presented their report during a series of Idaho Ag Outlook seminars, featuring leading industry experts and hosted this month in Idaho Falls, Twin Falls, Nampa and Lewiston.
“We’ve had back-to-back excellent years to be in Idaho agriculture,” Wilder said. “We’ve had all-time record highs in four commodity groups.”
Offsetting some of those gains, however, was an 18-percent revenue drop from Idaho’s top commodity, dairy, which represents nearly a third of the state’s total agricultural cash receipts. Idaho still ranks as the nation’s Number 3 producer of dairy, with the value of its production declining to just over $3.5 billion in 2023. Evidencing Idaho dairymen’s struggles, the U.S. Department of Agriculture’s Dairy Margin Coverage Program paid out in Idaho during every month of 2023.
After expenses, however, the report estimates farm profits will be down by 11-percent in 2023, at $3.769 billion. It’s a strong earnings total, nonetheless, following Idaho’s record 112-percent net farm income increase in 2022.
“It’s a very good number. We’re still near all-time highs,” Wilder said. “We’re down 11-percent year over year but the U.S. is down 17-percent, so we’re still outperforming the rest of the country. Farmers and ranchers did well in 2023.”
Increasing expenses were mostly driven by high interest rates. Farmers’ interest expenses are estimated to increase 42-percent to $714 million in 2023. Idaho farmers are also expected to take a hit regarding government payments, projected to decline by 22-percent to $153 million in 2023.
Looking ahead, economists predict growth in milk prices in 2024, primarily because the U.S. has the cheapest dairy prices, which should give producers an export boost. Idaho is also poised to add new dairy processing capacity.
Feed prices, both of hay and grain, are expected to decline. But Wilder expects the market for cattle and calves will be especially strong in 2024 due to the combination of extremely tight inventory and strong demand. Wilder believes cattlemen have begun keeping their animals much longer to increase carcass weight.
“If you own cows today and don’t have to go buy calves at the prices that are being asked, it’s a fun time to be in the beef industry,” Wilder said.
U of I agricultural economist Xiaoli Etienne, Idaho Wheat Commission Bill Flory Endowed Chair in Risk Management, predicts most farming inputs will hold steady or decline slightly in 2024. Gasoline is forecast to drop two-percent in 2024, while diesel prices should remain the same or drop slightly. Farm chemical prices dropped by 20-percent in the past year and may continue to decline in 2024. The value of Idaho farmland and cropland rental rates should remain stable throughout the coming year. Electricity prices should hold steady or increase slightly, as should machinery costs.
Costs of corn, wheat and barley seed for planting should increase slightly. Hired labor costs are expected to climb by 2.04-percent. While the average loan rate rose 35-percent throughout the past year, the Federal Reserve is expected to begin cutting interest rates in 2024.
Wilder anticipates a more significant drop in agricultural cash receipts will occur in 2024.
“My expectation in 2024 is we should be down below $11 billion but still above $10 billion, unless something catastrophic happens,” Wilder said.