December’s farm income forecast reveals what a challenging year it has been for American agriculture, projecting a continued decline in net farm income as receipts and government payments continue to decline while expenses continue to rise.
Income for 2024 is estimated at $140.7 billion, down 4.1% from 2023 and 22.6% from the 2022 peak, according to the United States Department of Agriculture. Adjusted for inflation, the year-over-year decline deepens to 6.3%, reflecting significant strain, particularly for crop farmers, Daniel Munch, economist at American Farm Bureau Federation, said in a market intel report.
“USDA’s December report underscores the volatility of the U.S. farm economy as farmers face their second consecutive year of declining income,” he said. “Net farm income in 2024 remains nearly 25% below its 2022 peak, and the minimal upward revisions since September offer little reprieve from the financial pressures farmers are enduring.”
Total crop receipts are expected to drop to $246.2 billion, down 9.2% YoY, driven by declining global demand and competition. Major crops like corn, soybeans and cotton face sharp revenue losses, with corn receipts down 20.8%, but small gains in vegetables and rice offer limited relief, Munch said.
“Crop producers, in particular, face dramatic declines in cash receipts, with little hope for immediate relief as global supply chain disruptions continue and prices for key commodities remain depressed,” he said. “Rising production costs threaten to erode profitability across the board.”
Meanwhile, production expenses are expected to fall to $453.9 billion, down 1.7% YoY, but rising labor costs, up 6.1% YoY, and interest costs, up 4.1% YoY, offset these savings, according to the release. Government support is also projected to decline, with subsidy payments dropping to $10.6 billion, down 13.6%, exacerbating farmers’ financial stress.
Farm Financial Performance Index hits 2024 high
While the USDA forecasts a decline in net farm income and an overall down performance in farm economics for 2024, November’s Farm Financial Performance Index compiled by the Center for Commercial Agriculture at Purdue University, hit 116, its highest value for the past 12 months and the second highest value for the past two years. It is up 16 points month over month and 11 points YoY, Michael Langemeier, associate director at the Center for Commercial Agriculture at Purdue University, told Equipment Finance News.
“There’s so much more optimism in the long term, and [farmers] are looking at that more long term with this new policy environment that it’s going to be,” he said. “It’s going to be a better environment for production agriculture in the next five years, and they’re not necessarily thinking that short term, because the fundamentals really haven’t changed for the next year.”
Farmers anticipate policy changes during a second Trump administration to provide similar benefits to those during Donald Trump’s first term, Langemeier said. During the first term, increased estate tax limits, decreased regulations and 100% bonus depreciation all benefited farmers.
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