Dive Brief:
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U.S. farm income is expected to plummet $42 billion this year marking the largest drop on record, according to the U.S. Department of Agriculture.
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After reaching an all-time high last year, net farm income in 2023 is on track to fall to $141.3 billion, the USDA’s Economic Research Service reported Aug. 31. The agency cited lower cash receipts and higher production expenses for the significant downturn in farm income, a broad measure of profits.
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As costs for feed and labor continue to rise alongside weakening crop and livestock prices, farm incomes are likely to be pressured even further in 2024. A farm income update is scheduled for late November.
Dive Insight:
Plummeting farm income is being driven by significant declines in cash receipts for major commodities, such as corn, soybeans, cotton, dairy, hogs, poultry and eggs. Adverse conditions affecting prices are pressuring lawmakers to establish robust safeguards in the upcoming farm bill.
Dairy farm income is on track to fall the most by percentage due to lower prices. According to USDA data, cash receipts are expected to be down 81% for dairy over last year, 43% for poultry and 39% for hogs. Meanwhile, corn and soybeans are projected to be down $8.5 billion and $5.4 billion, respectively.
As commodity prices continue to face downward pressure and uncertainty in demand, farm production expenses remain elevated. Total farm expenses are expected to be $460 billion, up $29 billion from last year, driven by sharp increases in fuel, interest rates, chemicals and fertilizers. Costs have surged by more than $1 billion since 2020.
Higher production costs have also left U.S. agricultural exporters at a competitive disadvantage, leading to a slowdown in trade. Ending stocks of farm products are expected to increase into 2024 as exports are expected to decrease.
A Senate Agriculture Committee GOP analysis said the expected decline in farm income makes it all the more important for lawmakers to approve a farm bill with a robust safety net.
“The opportunity for Congress to invest in a meaningful and enhanced farm safety net and suite of risk management tools while reauthorizing the farm bill should be a top priority given the headwinds facing the farm economy,” the committee said in a blog post.
The 2018 Farm Bill will expire Sept. 30, and lawmakers are racing to craft a bill before the industry begins to feel the impacts at the start of next year.
