U.S. farm income will tumble for the second year in a row from the record set in 2022, pulled down by lower commodity prices and rising production costs, forecast the Agriculture Department on Wednesday. Net farm income would fall 25 percent, to $116.1 billion, but still run 15 percent ahead of its 10-year average.
The financial foundation of the sector would remain relatively stable. Farm assets, such as land and machinery, were climbing in value faster than debt, so equity would increase by 5 percent this year, said USDA economists. The debt-to-asset ratio, an indicator of farm solvency, would tick upward to 12.78 percent this year from 12.73 percent in 2023.
Arkansas Sen. John Boozman, the senior Republican on the Senate Agriculture Committee, cited the USDA estimate as proof that “meaningful investments in the farm bill’s safety net programs” were needed. “We are witnessing the most rapid and steepest decline in the farm economy of all time,” he said.
Agriculture Secretary Tom Vilsack said “it stands to reason” that income would decline after three halcyon years of high commodity prices and income. “Farmers have done what farmers do. They produce, and they produced not just here in the United States but they have produced all over the world,” Vilsack said at a meeting of state agriculture directors before describing USDA initiatives to create new farm revenue streams.
Farm groups and their allies in Congress say high production costs justify an increase in so-called reference prices for field crops, which would make it easier to trigger subsidy payments. To cover the cost, Republicans would raid USDA climate funds — a red line for Democrats on the House and Senate Agriculture committees. More than two dozen environmental, wildlife, small-farm, and fiscal hawk organizations wrote leaders of the Senate and House Agriculture committees to insist that the climate funds be spent on their intended purpose and not diverted to pay for crop subsidies.
Thanks to off-farm income, particularly for small farmers, median farm household income is forecast at $99,455 this year, less than $100 lower than in 2023. U.S. median household income was $74,580 in 2022, according to the most recent estimate by the Census Bureau.
“Farm sector income is forecast to continue to decline in 2024 after reaching record highs in 2022,” said the Economic Research Service in its first projection of 2024 income. The ERS also slightly increased its income estimates for 2021, 2022, and 2023, the three best years for net farm income, a USDA gauge of profitability. Its updated figures were $185.5 billion, an increase of $2.7 billion, in 2022; $155.9 billion, an increase of $4.8 billion, in 2023; and $142.4 billion, an increase of $1.9 billion, in 2021. Since 2014, net farm income has averaged $105 billion a year.
Market prices for corn, soybeans, wheat, milk, hogs, turkey, and eggs will be lower this year, said the USDA. Broiler chicken prices would rise. Overall cash receipts for crops and livestock would decline by 4 percent.
Total farm expenses would rise 3.8 percent from 2023 to set another record high of $455.1 billion, forecast the USDA. Feed expenses would increase to $80.6 billion this year, labor to $47.4 billion, and livestock and poultry purchases to $44.4 billion. After falling nearly 18 percent in 2023, fertilizer expenses were forecast to rise 4.3 percent this year but still be below 2022 levels.
The income forecast for 2024 was highly tentative, since it was issued before the spring planting season, with harvest months away. The USDA updates the estimate in August and November.
After the steep steps down from 2022’s record, net farm income should run at this year’s level in the near term, said the Food and Agricultural Policy Research Institute last fall.
The USDA estimate of 2024 farm income is available here.