The estimate was far above the USDA’s projection in February that net farm income, a broad measure of profits, would plunge to $116 billion this year.
U.S. net farm income will be a much better than expected $140 billion this year, the fourth-highest total on record, forecast the Agriculture Department on Thursday. Production expenses are down for the first time since 2018, while farmers are pocketing increased revenue from eggs, cattle, milk, and broiler chickens.
The estimate was far above the USDA’s projection in February that net farm income, a broad measure of profits, would plunge to $116 billion this year. Still, income would be down for the second year from the record $182 billion in 2022, when Russia’s invasion of Ukraine drove up commodity prices and farmers received billions of dollars in pandemic relief payments. The 10-year average for net farm income is $104.9 billion.
Lower farm income “is not just an economic hiccup, it’s evidence of an agricultural downturn,” said Zippy Duvall, president of the American Farm Bureau Federation. Farm groups want higher crop subsidy spending as part of the new farm bill, but lawmakers have not agreed on how to pay for it. “High inflation, severe weather, and plummeting crop prices should serve as a wake-up call for Congress to finally step up and do the right thing by modernizing the farm bill,” said Duvall.
Agriculture Secretary Tom Vilsack said, “Returns to crop producers remain a challenge as we recover from shocks to the market such as Russia’s war in Ukraine.” Nonetheless, he said, farm income has been well above average for the past four years, in contrast to the preceding four years, when it was below average. Those time brackets coincide with the Biden and Trump years.
Lower market prices were the major reason for the decline in crop revenue this year, said the USDA report. Corn and soybeans, the two most widely grown crops, would see the largest declines. Livestock receipts were forecast to rise 7.1 percent, led by eggs, cattle, milk, and broiler chickens.
Farm expenses will fall this year chiefly because of lower feed costs, the largest item in the category. Outlays for fertilizer, pesticides, and fuel and oil would also fall.
Farm assets were growing faster than debts, and were projected to increase by $204 billion compared to a $32.8 billion rise in debt, said USDA economists. The debt-to-asset ratio, a widely watched indicator of farm financial strength, would decrease modestly, to 12.8 percent, the lowest in seven years.
Median total farm household income, which includes off-farm income, was forecast to rise to $99,683 this year, an increase of $1,699 from 2023. At the same time, so-called commercial farms with full-time operators would see a nearly 16 percent drop in median income, to $219,358, due to sharply lower agricultural income. Many farm households rely primarily on off-farm income. Half of the 1.89 million U.S. farms are “residence” farms with small amounts of land.
Along with the revised estimate of 2024 farm income, the USDA lowered its estimate of 2023 net farm income to $146.5 billion, down from the previous $155.9 billion, due to higher farm expenses. One factor in the revisions of the 2024 and 2023 estimates was the incorporation of data from the Census of Agriculture, said USDA economist Carrie Litkowski during a webinar. She said the degree of change in the estimates “isn’t too far out of the norm” for USDA revisions.
The income estimate looks at the farm sector in the aggregate and does not represent the standing of individual producers.
“Just because the overall net income figure for 2024 was higher than many expected, it doesn’t mean there aren’t real concerns with farm finances for many producers,” said Pat Westhoff, head of the Food and Agricultural Policy Research Institute, a think tank. “The net income of crop producers is down pretty sharply this year, but livestock producers as a group, especially cattle producers, are probably seeing an increase in net income.”
A week ago, FAPRI said the season-average prices for corn, wheat, and soybeans, the three mostly widely grown crops in the country, would run at pre-pandemic levels this year and in the near term. Cattle would be the most notable exception to an overall decline in crop and livestock values. “In the absence of new shocks to the weather, the macroeconomy, or policy, projected prices generally remain near current levels over the next five years.”
agriculture