A New Year’s Checkup on the Health of the Farm Economy

Well, we got through the New Year’s Eve of revelry. And now back to business again. Many of us like to start the business of the new year though with an annual physical checkup. So if we were to consider the nation’s farm economy as a medical patient overall, what would the doctor say about the health of the farm economy?

I’d say the patient is in really good shape, healthy, and they’re going to have to continue to manage that health in this coming year.

We will take a look at what happened in the farm economy in 2023. what’s likely to happen in this new year on this edition of agriculture USA, I’m Gary Crawford. Here’s part of that 1978 Kenny Rogers song have you know the gambler said if you’re gonna play the game, you got to learn to play it right. Yes. And as we look back at how farmers played the game in 2023,

The farmers showed a lot of flexibility in planting coming into this year.

USDA Chief Economist Seth Meyer says that word flexibility really does apply to help producers shifted their plantings to adjust to weather and market conditions.

You know, we surveyed farmers as to their intention. And then we come back and we survey them to what they actually did. And I think we had some movement at least from what they signaled they their initial thoughts about what they were going to do. And then what they actually did in response to the market saying, Hey, can we have a little bit more of this crop or that crop.

In March, corn growers said they intended to plant 92 million acres to corn, but by planting time a few months later, the market signals changed and farmers reacted by planting over 94 million acres to corn. Meanwhile, for soybeans, farmers in March were intending to plant 87 and a half million acres. They decided to cut that down to 83 and a half, one of the biggest March to June acreage changes on record. That was one surprise this past year and 2023 certainly brought us some other surprises along the way.

Overall crop yields pretty darn good for corn and soybeans, for instance, on a crop that didn’t really have all that favorable of growing condition.

In fact, at harvest time, one Iowa corn grower told us,

It’s remarkable the yields that were pulling out, given the limited rainfall we had.

And of course, Seth Meyer says despite some very hot very dry weather,

We had crops and yields just a little bit below trend. But given the farmers response to the demands for corn early on we had a record large corn crop.

15.2 billion bushels, 11% more than the 2022 crop, truly remarkable. However, as farmers close the books on 2023, many of those spreadsheets are showing that overall US farm income in 2023 came down a lot.

But it came down from a level in 2022 that was record high.

Seth Meyer says net cash income for producers in 2023 will come in at just under $158 billion, a 21% drop from 2022, but still…

Well above the average of the last couple of decades. And an interesting fact here is also that the last three consecutive years of farm income are the highest three farm income years in my lifetime.

Your lifetime? That brings the question of just how old are you?

I’m not as young as I like to think I am, how about that?

All right, we’ll leave it at that. But we did check the income reports for ‘21, ‘22 and ‘23. They’re the highest three consecutive farm income years in 50 years. Nonetheless, with that 20% plus income decline in 2023, it looks like producers are going to need to tighten their financial belts a bit more in 2024. Seth Meyer says commodity prices continue to soften going into this new year.

And I think absent some other external disruption, we’re going to have challenging prices in the coming year, and a challenging margin when it comes to things like breakeven, even for things like corn and soybeans.

And so Meyer says that in this next year,

Farmers are going to have to be on their marketing game. You got to know they’re gonna have to be paying attention a lot more to that margin and the net cost.

But he doesn’t expect any kind of major or minor farm crisis situation.

I think you’ve had three really good years in the farm sector, which gives me some confidence that producers will be able to manage a downturn because they’re in a good position to do so.

So Dr. Meyers, a technical evaluation of the health of our farm economy in technical language?

Pretty darn good.

Pretty darn good. You’ve been listening to Agriculture USA. I’m Gary Crawford reporting for the US Department of Agriculture.