farm income

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.

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.

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-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.

Economic growth and inflation will slow in the coming months, but commodity prices are likely to be volatile as the world’s farmers try to catch up with the global appetite for food, said two leading agricultural economists on Wednesday. “I think that 2023 still looks pretty strong” for U.S. farm income, said Nathan Kaufman, the Kansas City Federal Reserve Bank’s principal expert on agriculture economics.