Following a year of unfavorable weather in many parts of the nation, Russia’s invasion of Ukraine, an avian flu outbreak and the high commodity prices they created, this year will bring lower commodity prices, farm income and food price inflation, economists at the Food and Agriculture Policy Research Institute at the University of Missouri project.

“What goes up, generally comes back down in agricultural markets,” said Pat Westhoff, the institute director.

“Projected prices for most crops, poultry and dairy products all retreat in 2023 from recent peaks, and so do some production expenses,” he said.

Net farm income is likely to fall back from the record levels of 2022, and consumer food price inflation is also likely to slow in 2023, he said.

Key findings in the 77-page the institute’s annual Baseline Outlook Report include:

• If weather allows crop yields to return to trend-line levels in 2023, prices for corn, soybeans, wheat, cotton and many other crops are likely to fall. Over the next 10 years, average nominal prices will be much lower than they have been in the 2022-2023 marketing year, but they will remain above the average of the last five years.

• Higher fertilizer, fuel and feed costs contributed to a sharp increase in farm production expenses in 2022. A smaller increase is projected in 2023, and lower prices for some inputs will result in a reduction in production costs in 2024 and 2025.

• Cattle, hog, poultry and milk prices all increased in 2022, while feed costs, drought and avian influenza limited supplies and consumer demand generally remained strong.

• In 2023, most projected livestock sector prices will fall as supplies rebound and demand growth slows. The one major exception is cattle. Drought and other factors will limit the number of animals available for slaughter.

• Commodity program spending associated with Title I of the farm bill will likely be relatively low in  2023 and 2024 but rebound in later years given projected changes in commodity prices and program payment triggers under the Price Loss Coverage and Agricultural Risk Coverage programs.

• Net farm income reached a record level in 2022, as sharply higher crop and livestock receipts more than offset reduced government payments and increased production expenses. Projected net income likely will decline in 2023 and 2024 as receipts and payments fall.

• Farm asset values have increased with land prices in recent years, and another increase is projected for 2023. Given the assumptions of the outlook, lower farm income and high interest rates will restrict further increases in farm real estate values in subsequent years.

• Consumer food price inflation jumped to 9.9% in 2022 as farm commodity prices rose, labor and other costs increased, supply chain problems continued and consumer demand remained strong. Price increases have slowed in recent months, and the projected annual increase in consumer food prices will be 4.4% in 2023 and less than 2% in 2024.