Farm Income Forecasted to Drop 25 Percent in 2024

The USDA released its February 2024 Farm Income and Financial Forecasts. It’s the agency’s first income prediction for the new year. Carrie Litkowski, an economist with the Economic Research Service, says farm income is forecast to fall roughly 25 percent this year.

“Starting with profits for the farm sector as a whole which are forecast to decline in 2024. Net cash farm income for calendar year 2024 is forecast to fall 24 percent relative to 2023 in nominal dollars, and net farm income is forecast to solve almost 26 percent.”

She talks about some of the factors behind the income drop.

“Cash receipts from crops and animal product sales, which are expected to decrease $21 billion, or four percent, in 2024. Also, direct government payments are forecast to decrease almost $2 billion, or 16 percent, and total production expenses are forecast to increase almost $17 billion or four percent.”

Litkowski talks about 2024 farm sector balance sheets.

“Farm sector assets, debt, and equity are each forecast to increase, with equity forecast to increase 4.7 percent. We’re forecasting net average net cash farm income for farm businesses will decrease 27 percent in 2024, so that’s 72 thousand dollars.”

Median farm income is predicted to be similar to last year.

“For those households that operate our farms, the median total farm household income is forecast to hold relatively steady at $99,445. Again, that’s just the median.”

Danny Munch, an economist with the American Farm Bureau Federation, discusses what the report says about the farm economy.

“It measures net farm income, a broad measure of farm profitability, and the latest report anticipates a decrease from 2023 numbers of $155 billion to $116 billion in 2024. That’s a 40 billion – or 25 percent drop year-over-year, and the largest recorded year-to-year dollar decrease in net farm income on record.”

He says there are two main drivers behind the income drop.

“A $21 billion expected decline in cash receipts, so what farmers are receiving price-wise for their crops and livestock, and a $17 billion increase in production expenses, reaching a record level of $455 billion spent on production expenses expected for 2024.

This report emphasizes the need for the new farm bill to be finished this year.

“Farmers utilize many programs within the farm bill, including ARC, PLC, and Dairy Margin Coverage, as well as the risk management options to help buffer against cost increases or volatile markets and increases in production expenses. So, when we see a decrease or an expected decrease in farm income of this magnitude, it’s really important that these safety nets are available to farmers to make sure that we have a secure domestic food supply.”