A revision in the U.S. Department of Agriculture farm income caught the eye of economists following the Sept. 5 update presented by Carrie Litkowski with the agency’s Economic Research Service.
The USDA made news when it revised the farm income forecast from $116 billion back in February to $140 billion in August. Daniel Munch, an economist with the American Farm Bureau Association, said the upward revision placed net farm income above the 20-year average of 2004 to 2023 and reflected a smaller decline than initially expected.
Litkowski, a senior economist with ERS, said in February that the agency forecast farm income would drop 26% from 2023 to 2024. She said revisions show that animal and animal product cash receipts would be significantly higher, and production expenses were less than projected previously.
For 2023, the net farm income estimate was set at $146.5 billion.
Munch said the trend line has slid in the past couple of years.
“USDA’s September 2024 farm income forecast projects this to be yet another challenging year for American farmers, who are expected to lose nearly a quarter of their income in two years,” Munch said. “Net farm income, a key measure of profitability, is forecast at $140 billion for 2024, marking a $6.5 billion decline (4.4%) from 2023, following a sharp 19.5% drop from 2022 to 2023. Inflation-adjusted figures indicate even greater financial strain, with net farm income expected to fall by $10.2 billion (6.8%) from the previous year.”
Litkowski said lower crop prices have been a driver of lower farm income. Cash receipts from commodity sales are expected to decrease about $9.8 billion, and direct government payments to farmers are forecast to decrease $1.8 billion. When compared to 2023, corn receipts for 2024 were forecast to decline about 22% or about $18 billion, and soybeans receipts were pegged downward about 17% or about $10 billion. Receipts were expected to decline for fruit, nuts, wheat and cotton.
The silver lining has been cash receipts from animals and animal products, she said. “Cattle and calf receipts are forecast to increase almost 4%, or $4 billion, which would be the fourth consecutive year that they have increased,” Litkowski said.
Egg producers were beneficiaries in the protein market.
“Receipts for eggs are perhaps the biggest story in that they are forecast to see the largest increase in 2024 at 35%, or about $6 billion, so eggs alone account for a little more than half of the total increase in animal and animal product receipts, and this reflects expectations for higher eggs prices on average in 2024,” Litkowski said.
Increases are also projected for dairy and broiler receipts, and hogs are forecast to remain relatively stable, she said.
Senate Republicans who serve on the agriculture committee said the USDA’s report masks financial challenges farmers and ranchers are facing today in a statement they issued after the USDA report.
“USDA’s recent update to the farm income forecast made the second-largest upward revision to farm income over the last decade, increasing the projection for 2024 net farm income by nearly $24 billion to $140 billion,” the GOP report stated. “If realized, this new net farm income projection would be down 4%, or $6.5 billion from 2023. While USDA made the upward revision to U.S. net farm income, relative to the highs of 2022 U.S. net farm income remains off by 23%, and, when adjusted for inflation, is still experiencing the third-largest two-year decline in history.”
The next update is planned for Dec. 3.
Dave Bergmeier can be reached at 620-227-1822 or [email protected].
