Farm income is projected to decline for the second consecutive year, with 2024 net income estimated at $140.7 billion, down $6 billion from last year and nearly 23% below the 2022 peak, according to USDA.
The agency released its 2024 Farm Sector Income Forecast in early December.
While receipts from major crops like corn and soybeans are down $23.5 billion from 2023, USDA said higher-than-expected animal product receipts, led by cattle, are expected to cushion crop-related losses.
“USDA’s December report underscores the volatility of the U.S. farm economy as farmers face their second consecutive year of declining income,” said Daniel Munch, American Farm Bureau Federation economist. “Net farm income in 2024 remains nearly 25% below its 2022 peak, and the minimal upward revisions since September offer little reprieve from the financial pressures farmers are enduring.”
Cash receipts
USDA said inflation-adjusted cash receipts in agriculture are projected to drop by $16.6 billion (3.1%) in 2024, totaling $516.9 billion, with crop receipts taking the biggest hit. Corn and soybean receipts are expected to decline by $16.6 billion (20.8%) and $6.9 billion (12.3%), respectively, as lower prices overshadow increased quantities sold. Hay receipts are anticipated to decline by $0.8 billion (8.1%), rounding out a challenging year for crop producers.
Animal and animal product cash receipts are expected to rise by $21 billion (8.4%) to $270.6 billion in 2024, driven by strong gains in several key categories. Chicken egg receipts are projected to see the most significant increase, surging $7 billion due to higher prices. Milk receipts are expected to grow by $5.3 billion (11.5%), while cattle and calf receipts are forecast to increase by $7.3 billion (7.2%), primarily due to price growth.
Hog receipts are also set to rise by $1.5 billion (5.7%), benefiting from higher prices and quantities sold. However, turkey receipts are forecast to drop sharply, declining $2.8 billion (43.3%) due to anticipated lower prices and reduced sales.
“Livestock producers enjoy higher prices at the moment, but gains in this sector are uneven,” Munch said. “Rising production costs threaten to erode profitability across the board.”
Expenses, government payments
USDA said in its report that production expenses in agriculture are forecast to decline in 2024, with total costs expected at $453.9 billion, down $8 billion from the previous year. The drop is primarily attributed to lower feed costs, projected at $69.5 billion, a $10.5 billion decrease from 2023. However, labor and interest expenses are set to rise, with labor costs increasing by $3 billion to $51.8 billion and interest expenses climbing to $29.8 billion, up from $28.5 billion last year.
Direct government payments are expected to drop in 2024, totaling $10.6 billion, down $1.7 billion from 2023. The decline is mainly due to lower payouts from the Dairy Margin Coverage program and disaster assistance, including the Emergency Relief Program. However, conservation funding is set to increase, with payments forecast at $4.4 billion, a $806.9 million boost, supported by expanded Conservation Reserve Program enrollment and funding from the Inflation Reduction Act. Payments under the Agricultural Risk Coverage program are also expected to rise, reaching $461 million in 2024 compared to $270.4 million in 2023.
“With government payments shrinking and the income safety net failing to keep pace with the realities of modern agriculture, farmers are left to navigate an increasingly precarious financial landscape,” Munch said.
Financial health
USDA said the financial health of the farm sector remains strong despite declining working capital. Total farm sector assets are projected to grow to $4.2 trillion in 2024, up from $4 trillion in 2023, while total debt is forecast at $542.5 billion. This improvement lowers the debt-to-equity ratio to 14.75% and the debt-to-asset ratio to 12.86%, both at their lowest levels since 2016. However, working capital is expected to decrease by 6.9% from 2023, ending the year at $123.6 billion, reflecting tighter liquidity for farmers heading into 2024.
“As policymakers continue overdue farm bill discussions, these figures serve as a reminder that the targeted reforms that could address our farmers’ unique challenges remain stuck in the legislative process,” Munch wrote.
House Agriculture Committee Chairman Glenn “GT” Thompson (R-PA-15) and Senate Agriculture Committee Ranking Member John Boozman (R-AR) emphasized in a statement the need for Congress to fulfill its commitments to America’s farmers and ranchers. They stressed the importance of taking action to secure the future of American agriculture.
“Today’s farm income update underscores what Agriculture Committee Republicans in the House and Senate have warned about for two years: America’s farmers and ranchers are in serious trouble, and the outlook remains grim,” the statement read. “From 2023 to today, row crop producers alone have lost more than $50 billion and stand to lose even more next year. Immediate action is required to stabilize the farm economy and prevent a crisis that will only become more costly to address over time.” — Charles Wallace, WLJ contributing editor
