U.S. net farm income will be a stronger-than-expected $151 billion this year, the second-highest total on record, estimated the Agriculture Department on Thursday. That’s roughly $10 billion higher than the August forecast and due chiefly to cost cutting by producers, aided by lower fertilizer, fuel, and feed prices.
Cropland values rose by 7.2 percent in the northern Plains this summer, said agricultural bankers in a quarterly survey by the Minneapolis Federal Reserve Bank. Land values rose even as farm income declined from last summer, lenders said, due to high production costs and lower commodity prices, with a decline expected for this fall, too.
Row crop and specialty crop growers are eligible for more than $3 billion from the Emergency Relief Program (ERP) to offset losses from natural disasters in 2022, said the USDA. Administrator Zach Ducheneaux of the Farm Services Agency said 2022 "was another year of weather-related challenges — for some, the third consecutive year or more in a row."
Although farmland values are strong, some ag bankers report a downturn in prices in the central Plains after a three-year run-up in values, said senior economist Cortney Cowley of the Kansas City Federal Reserve on Wednesday. The majority of bankers, however, expect farmland values to hold steady or increase moderately.
Congress should make the wealthiest farmers pay a larger share of the cost of taxpayer-subsidized crop insurance and hold the line on crop subsidies in the new farm bill, said a half dozen think tanks, budget hawks, and environmental groups on Wednesday. “There is no obvious or urgent need to increase farm subsidies,” said Nan Swift of the R Street Institute, despite the appeals of farm groups.
Household income edged downward in rural America in 2022, but the poverty rate held steady at 15 percent, said the Census Bureau on Tuesday. Median household income in rural America was more than $21,000 lower than in metropolitan areas, helping to explain why rural poverty rates are higher than the U.S. average.
U.S. farm income will decline modestly in 2024 and then run at historically high levels in the near term, said the Food and Agricultural Policy Research Institute (FAPRI) think tank at the University of Missouri on Monday. Although well above average, net farm income of around $140 billion annually in coming years would be a step down from the record of $183 billion last year.
Congress should provide a “meaningful enhancement” of crop subsidies and the crop insurance program in light of declining farm income, said Republican staff workers on the Senate Agriculture Committee on Thursday. “Headwinds persist in the U.S. farm economy,” they said in a report, pointing to a slowdown in farm exports, weakening commodity prices, high production costs, and rising interest rates.
Agricultural credit conditions are likely to remain strong through the end of this year, although bankers expect farm income and loan repayment rates, now the healthiest since 2010, to soften in the months ahead, said the Kansas City Federal Reserve on Thursday.
The season-average prices for most U.S. agricultural commodities are on a decline that could persist into 2026, said a report from the FAPRI think tank at the University of Missouri. Global economic growth has slowed after a heady recovery from the pandemic in 2021, and world grain production is up this year, creating more competition for U.S. crops.
The U.S. agricultural sector is headed for the third year in a row of exceptionally high net farm income, albeit a step down from the record set last year. Since 2021, net farm income — a broad measure of profits — has run at least $39 billion a year above the 10-year average.
The farm real estate market was resilient in the face of higher interest rates and "some moderation" in the farm economy this spring, according to commercial lenders surveyed by five regional Federal Reserve banks.
The farm-gate value of U.S. corn and soybeans, the two most widely grown crops in the country, will fall 16 percent compared to last year's harvests due to a steep drop in commodity prices, according to USDA data. The season-average price for corn was forecast to be $1.70 a bushel below the near-record prices paid for the 2022 crop, and soybeans were expected to be $1.50 a bushel below last year's price.
After years of stagnation, cropland values rose an average of $1,300 an acre in the three years since the pandemic hit the United States, according to the Agriculture Department. Values mushroomed 33 percent at the same time farmers enjoyed back to back years of record-high farm income, with income forecast to be the third-highest this year.
The two largest U.S. farm groups stuck to requests for expensive changes in the farm safety net — higher crop subsidy rates and broader access to subsidized insurance — in the face of a warning on Tuesday that the money might not be available. Senate Agriculture Committee chair Debbie Stabenow pointed to proposals that would tie an increase in the federal debt limit to steep cuts in spending.
The financial outlook for many farmers is favorable, thanks to high commodity prices, but higher interest rates are an ongoing concern, according to ag bankers surveyed by the Federal Reserve. Interest rates on loans to farmers were 3.5 to 4.5 percentage points higher in the opening months of this year than they were at the end of 2021.
High commodity prices supported "profit opportunities for many producers across the farm sector" ahead of the spring planting season, although there were concerns about operating expenses, higher interest rates and drought, said the Kansas City Federal Reserve Bank.
Due to consolidation, federal farm supports increasingly are paid to the wealthiest producers, who have household incomes far above the rest of the country, said analysts at a think tank seminar on Monday. The stream of money to large operators was a stark contrast to frequent depictions of the farm program as the safeguard of small family farmers, they said.
In a decade, government outlays to subsidize crop insurance increased 60 percent, expanding in step with the rapid growth in acreage covered by the policies, according to Risk Management Agency data released Sunday.