SALEM, Ohio — Farmers are expected to see the largest decrease in year-to-year farm income on record in 2024, according to a recent report by the U.S. Department of Agriculture.
A drop of nearly $40 billion, or 25.5%, in net farm income was predicted in the 2024 Farm Sector Income Forecast, driven largely by climbing production costs and declining crop prices. Farm income is expected to drop from $155 billion in 2023 to $116 billion this year. This steep decline comes after record-high farm income level of $185.5 billion in 2022.
Expenses
Production expenses are expected to increase by $16.7 billion, or 4%, from 2023 to a total of $455 billion. This year will be the sixth year in a row where production costs increased and the fourth year in a row where it reached a record high, according to an American Farm Bureau Federation’s Market Intel analysis of the USDA report.
Production costs are expected to be up in nearly every category; however, one bright spot is the cost of fuel is expected to drop relative to prices in 2023.
Daniel Munch, an American Farm Bureau economist, said in the Market Intel report that the rising production costs left many farmers feeling exposed last year and “beyond to the limitations of farm programs that are focused on fixed reference prices, or slowly adjusting price and revenue histories, which are among the issues up for discussion in the current farm bill debate.”
Income
Cash receipts for crops and livestock are anticipated to drop $21 billion from $507 billion in 2023 to $486 billion in 2024.
Crop receipts will make up $16.7 billion, or 6%, of the decline. Corn receipts will see the biggest decline, reaching a three-year low. Corn will drop as much as $11.3 billion or 14%. Other crops that will see significant decreases include soybeans, falling $6 billion (10%), and hay, falling $800 billion (8.3%).
Livestock will also see a decline in cash receipts, however not to the same degree as crops. All animal products will see a drop of $4.6 billion, or 1.8%.
Government payments to farmers dropped by $1.9 billion, or 16%, from 2023 to 2024. This year will mark the fourth consecutive year of decreasing payments to farmers since the peak during the COVID-19 pandemic in 2020 and the lowest year since 2014.
Ad Hoc and supplemental program payments, which include payments from the Emergency Relief Program, Quality Loss Adjustment program and farm bill-designate disaster relief programs, are expected to drop from $6.54 billion to $5.84 billion, or 11%. Commodity insurance indemnities will also see a slight reduction, according to the report.
With such a significant drop in net farm income expected, the next farm bill has become even more important for the future of the U.S. farm economy, Munch said.
“Farmers and ranchers will have a resounding voice, as they should, in the formulation of vital legislation such as the farm bill, which can either complicate or streamline their ability to contribute to a reliable and resilient U.S. food supply,” Munch said.
Farmer sentiment down
Similarly, Purdue University’s most recent Ag Economy Barometer report, released on Feb. 6, found that farmer sentiment took a downturn after the start of the year.
According to the Barometer, which is a nationwide measure of the health of the U.S. agricultural economy, producers were feeling optimistic at the year’s end, but that changed as the realities of the new year set in, which included lower prices for crops and livestock, and consequently, lower farm income.
Historically, producers have been more concerned about higher input costs. But for the first time, the percentage of producers choosing lower crop and livestock prices as their biggest concern matched the percentage of those who chose higher input costs.
“This alignment indicates that U.S. farmers are worried about a possible cost/price squeeze leading to lower farm incomes,” Purdue’s report stated.
