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USDA Predicts Large Decline in Farm Income

USDA’s Economic Research Service forecasts that U.S. net cash farm income will decrease by $42.2 billion, or 25.8 percent, to $121.7 billion in 2024 in inflation-adjusted dollars. This is after net farm cash income decreased in 2023 by a forecast of $50.2 billion to $163.9 billion. Net cash farm income is defined as gross cash income minus cash expenses.

Net farm income is forecast to decrease by $43.1 billion to $116.1 billion from 2023 to 2024. Net farm income is a broader measure of farm sector profitability that incorporates noncash items, including changes in inventories, economic depreciation, and gross imputed rental income. Cash receipts for farm commodities are projected to fall by $32.2 billion to $485.5 billion in 2024. Meanwhile, production expenses are expected to increase by $7.2 billion, or 1.6 percent, to $455.1 billion in 2024.

Also, total commodity insurance indemnity payments are forecasted to fall by $1.5 billion in 2024, and direct government payments to farmers are projected to fall by $2.2 billion from 2023 levels to $10.2 billion in 2024.

After the release of the annual Farm Sector Income forecast, Agriculture Secretary Tom Vilsack issued the following statement:

“After the three highest consecutive years on record in 2021-2023, the first farm income forecast of 2024 indicates net farm income this year will return to prior levels. During this period of record farm income, U.S. farmers rose to the occasion by producing strong harvests and increasing commodity stocks while the U.S. economy recovered more quickly and more robustly than that of the global economy from COVID-19. As a result, while we have rebuilt the global supply, we are seeing a decreased demand for U.S. commodities and commodity prices are coming down. At the same time, while some production costs have come down, others, including labor, pesticides, and livestock purchases, have increased. This brings us to the slightly below historic levels for farm income forecasted today.

“The forecast underscores the critical importance of USDA’s ongoing work to help foster prosperity for producers and the communities they love by supporting an economy that grows from the bottom up and the middle out, and by creating new market opportunities that promote competition in the marketplace that can help combat low prices and high input costs.

“Under the Biden-Harris Administration, USDA has taken unprecedented actions to level the playing field so small and mid-sized farmers can get a fair price for their products, while making billions of dollars in transformative investments through the American Rescue Plan and Inflation Reduction Act to create new markets and new income opportunities for family farmers. USDA will continue to focus its efforts on enhancing economic resiliency and robust price competition, increasing farmers’ and ranchers’ earnings, increasing the ability to compete, and keeping farming viable and rural communities thriving.”

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