How is my operation stacking up against others? That question is pertinent when a new year kicks in and balance sheets are compiled.
The recent U.S. Department of Agriculture’s Economic Research Service offers perspective about what could be ahead. USDA-ERS noted farm sector income was forecast to decline in 2024 after reaching record highs in 2022. Net farm income, a broad measure of profits, reached $185.5 billion in calendar in 2022. It dropped to $155.9 billion in 2023 and it is forecast to take a 25.5% drop in 2024 to reach $116.1 billion.
Overall, farm cash receipts are forecast to decrease by $21.2 billion from 2023 to $485.5 billion in 2024. Total crop receipts are forecast to decrease by $16.7 billion from 2023 levels to $245.7 billion following lower receipts for corn and soybeans.
Total animal and animal product receipts are projected to decrease by $4.6 billion to $239.8 billion in 2024.
Of course, bottom lines are also determined by expenses and 2024 is going to be tighter with higher interest rates on operating loans.
The American Farm Bureau Federation noted the lower prices paid to farmers for crops and livestock and increased costs for supplies are likely to reduce margins.
Total production expenses, including those associated with operator dwellings, are forecast to increase by $16.7 billion from 2023 to $455.1 billion in 2024. Livestock and poultry purchases and labor expenses are expected to see the largest increases in 2024.
Big ticket cost
The farm bill has a projected cost of $1.46 trillion over 10 years.
The call to move ahead soon with a five-year farm bill has broad support among political leaders and farm groups. The stall points are as known today as they were a year ago when High Plains lawmakers pledged to work in consensus to get a deal that covered the basics from crop insurance and flexibility as championed by U.S. Rep. Tracey Mann, R-KS, and others in the House and Senate.
The current stalemate has to do with other players. The budget process continues to be mired with disagreement over how much should be allocated to the bill, which includes nutritional programs—the bulk of the fam bill spending—and until those turf battles are resolved it will be a slog.
One silver lining is that farm sector equity is expected to increase by 4.7% ($166.2 billion) from 2023 to $485.5 billion in 2024 as farm sector assets are forecast to increase 4.7% ($193.2 billion) to $4.28 trillion in 2024 following expected increases in the value of farm real estate assets. Farm sector debt is expected to increase 5% and the debt-to-asset levels are expected to go from from 12.73% to $12.78% in 2024.
Bottom line
The bottom line ultimately is determined by margins and even with projections of fuel and fertilizer expenses holding the line farmers and ranchers are already tightening their belt.
As the House will return into session soon let’s hope those calls, emails and interactions with lawmakers have taken root. Wheat producers are waiting for their crops to emerge and it won’t be long before corn and soybean growers are headed to the fields.
The time is now to get a farm bill passed for farmers and ranchers and those whose livelihood depends on their profitability.
Dave Bergmeier can be reached at 620-227-1822 or [email protected].
