Dive Brief:
- Farm production costs skyrocketed 15.2% last year as the agriculture sector grappled with inflationary prices and fallout from supply chain disruptions, the U.S. Department of Agriculture reported last week.
- Estimated production expenditures hit $452.7 billion in 2022, compared to $392.9 billion the previous year. Average cost per farm increased 15.8% to $226,986.
- Expenses across all categories increased from the previous year. Feed, labor, farm services and livestock and poultry expenses were the four largest expenditures, making up 48.5% of total costs in 2022.
Dive Insight:
Production costs are only expected to surge higher in 2023, creating a difficult calculus for farmers as they contend with lower prices for livestock and crops.
Expenses for this year are set to total $459.5 billion, according to the USDA's farm sector forecast in February. Meanwhile, farm sector income is expected to decline after two years of strong growth.
Some costs are expected to see major jumps in 2023, following significant increases the year before. Interest expenses, for example, are set to climb 22.4% to $33.8 billion, while costs of labor, livestock and poultry are also expected to rise.
Despite these increases, overall costs in 2022 and estimates for 2023 remain below the record high set in 2014 when adjusted for inflation, according to the USDA.
Agriculture groups have called for a robust safety net in this year's farm bill to help offset higher production costs. Although food prices are falling, they're not dropping fast enough to trigger government payments under the USDA's Price Loss Coverage program.
