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USDA forecasts decline in farm sector profits for 2024

Net farm income expected to fall by $6 billion, with significant decreases in crop receipts and government payments.

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The U.S. Department of Agriculture (USDA) has released its December 2024 Farm Income Forecast, predicting a decline in net farm income for the upcoming year. Net farm income, a broad measure of profits, is forecasted to drop to $140.7 billion in 2024, a decrease of $6 billion (4.1%) from 2023 in nominal terms. When adjusted for inflation, the decrease is even more pronounced at $9.5 billion (6.3%).

Despite this decline, net farm income in 2024 is projected to remain 15.9% above the 20-year average of $121.4 billion. Net cash farm income, which includes cash receipts from farming and farm-related income minus cash expenses, is also expected to decrease by $1.8 billion (1.1%) to $158.8 billion in nominal terms, or by $5.7 billion (3.5%) when adjusted for inflation.

The forecast highlights a mixed outlook for different sectors within agriculture. Cash receipts from the sale of agricultural commodities are expected to decline by $4 billion (0.8%) to $516.9 billion. Crop receipts are projected to fall by $25 billion (9.2%), driven by lower receipts for corn and soybeans. Conversely, receipts for animal and animal products are expected to rise by $21 billion (8.4%), with increases in cattle, eggs, milk, broilers, and hogs.

Direct government payments are forecasted to decrease by $1.7 billion (13.6%) to $10.6 billion, mainly due to lower Dairy Margin Coverage Program payments and reduced supplemental disaster assistance. Total production expenses are expected to decrease by $8 billion (1.7%) to $453.9 billion, with significant declines in feed, fertilizer, and pesticide expenses.

Farm sector equity is anticipated to increase by 5.2% to $3.68 trillion, driven by higher farm real estate values. Farm sector debt is forecasted to rise by 4.5% to $542.5 billion, with the debt-to-asset ratio improving slightly to 12.86%.

The average net cash farm income for farm businesses is expected to decrease by 3.2% to $112,900 per farm. While farm businesses specializing in crops are forecasted to see lower average net cash income, those specializing in animal products are expected to see an increase, with dairy farms experiencing the largest percentage gain.

Median total farm household income is forecasted to rise by 2.7% to $100,634, with median off-farm income increasing by 3.6% to $82,775.

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