The Department of Agriculture is projecting farmers will experience their second consecutive year of a sizable drop in net income.
USDA’s latest forecast, released Wednesday by the department’s Economic Research Service, shows 2024 net farm income dropping by about 25.5% — $39.8 billion in nominal dollars — after already declining 16% — $29.7 billion — in 2023 from 2022’s record figures. Even after adjusting for inflation, USDA’s projected $116.1 million net farm income for 2024 would be about 1.7% below the 20-year average and 40.9% below the 2022 record.
Net cash farm income, which more closely tracks farmers' cash flow, is expected to experience a similarly sharp decline of 25.8% — or $42.2 billion — in inflation-adjusted terms. But the figure is about 13.7% lower than the 20-year average and has fallen 43.2% since its peak in 2022.
Net cash farm income is based on cash receipts from farming, plus government payments and other farm-related income, minus cash expenses. Net farm income also factors in depreciation and changes in inventory values.
The income declines are driven by dropping commodity returns and government payments while production expenses continue to rise.
According to ERS, commodity cash receipts are expected to drop more than $21 billion in 2024 largely due to a $16.7 billion year-over-year decline in crop returns on falling corn and soybean income. Animal and animal product receipts are projected for a smaller drop, about $4.6 billion.
ERS estimates that government payments will drop nearly 16%, trimming $1.9 billion off the 2024 forecast for a total of $10.2 billion. USDA points to “lower supplemental and ad hoc disaster assistance in 2024 relative to 2023” as the principal reason for the decline.
Production expenses are not expected to adjust to the diminishing crop and livestock returns and instead are anticipated to rise $16.7 billion. All told, that increase would put total expenses at about $455.1 billion due largely to higher labor costs and rising purchase prices for livestock and poultry.
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The income picture and other economic factors are projected to add another $27 billion to farm sector debt, a 5.2% increase to total $547.6 billion. The sector’s equity and assets are both projected to rise 4.7% throughout the year, but debt-to-asset ratios are projected to see a slight drop from 12.73% in 2023 to 12.78% in 2024.
Improvements in the off-farm economy are not expected to be enough to bring median total farm income higher in 2024; USDA projects the figure to be 0.1% lower due in large part to median farm income dropping to negative $1,198.
According to the latest Ag Economy Barometer, many of the nation’s producers were already expecting diminished economic returns in 2024. The monthly report from Purdue University and the CME Group showed 28% of producers point to lower commodity prices as a top concern for their operations this year.
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