After hitting all-time highs in 2022, farm sector revenue is predicted to decline further in 2024. In nominal terms, net farm income, which is a broad indicator of earnings, came to $185.5 billion in the calendar year 2022. Net farm income is expected to fall by $39.8 billion (25.5 percent) to $116.1 billion in 2024 from the 2023 level, following a $29.7 billion (16.0 percent) decline from 2022 to a projected $155.9 billion in 2023. In 2022, net cash agricultural income was $202.3 billion. Net cash farm income is expected to drop by $38.7 billion (24.1 percent) to $121.7 billion in 2024 after falling by $41.8 billion (20.7 percent) from 2022 to a projected $160.4 billion in 2023.

Net farm income is expected to fall by $43.1 billion (27.1 percent) in inflation-adjusted 2024 dollars from 2023 to 2024, while net cash farm income is expected to fall by $42.2 billion (25.6 percent) from the previous year. Both metrics would, if achieved, be below their 2003–22 averages in 2024 (in dollars adjusted for inflation).
Synopsis of Results

In nominal dollars, farm cash receipts are expected to decline by $21.2 billion (4.2 percent) between 2023 and 2024, to $485.5 billion. Following decreased payments for maize and soybeans, total crop receipts are predicted to drop by $16.7 billion (6.3 percent) from 2023 levels to $245.7 billion. Revenues from animals and animal products are expected to drop to $239.8 billion in 2024, a loss of $4.6 billion (1.9 percent). It is anticipated that receipts for milk, eggs, turkeys, cattle, and calves will decline in comparison to 2023.

In 2024, direct government farm payments are expected to total $10.2 billion, a $1.9 billion (15.9%) drop from 2023. Direct government farm payments comprise payments from the Federal government to farmers and ranchers through farm programs; however, they do not include loans from the United States Department of Agriculture (USDA) or insurance indemnity payments from the Federal Crop Insurance Corporation (FCIC). The primary cause of this reduction is because farmers and ranchers received less supplemental and ad hoc disaster aid in 2024 than they did in 2023.

It is projected that from 2023 to 2024, total production expenses, including those related to operator residences, will rise by $16.7 billion (3.8 percent). The biggest gains in 2024 are anticipated to be in labor costs and the procurement of livestock and poultry, while expenditure on fuels and oils is predicted to decrease in comparison to 2023.

In nominal terms, it is anticipated that farm sector equity will rise by 4.7 percent ($166.2 billion) from 2023 to $3.74 trillion in 2024. Assets in the agriculture sector are anticipated to rise 4.7% ($193.2 billion) to $4.28 trillion in 2024 as a result of anticipated gains in the value of farm real estate assets. It is anticipated that debt in the farm industry would rise 5.2% ($27.0 billion) to $547.6 billion in 2024. It is anticipated that the sector's debt-to-asset ratio will somewhat worsen from 12.73 percent in 2023 to 12.78 percent in 2024. It is predicted that working capital will decrease 16.6% in 2024 compared to 2023.

Forecast: Total Cash Receipts Will Fall in 2024 for the Second Straight Year

The projected decline in total inflation-adjusted cash revenues from 2023 to 2024 is $32.2 billion, or 6.2 percent. In 2024, crop cash receipts are expected to drop by $22.4 billion, or 8.3 percent. Similarly, a $9.9 billion (4.0 percent) drop in animal and animal product cash receipts is anticipated.
The cash revenues for crops, livestock and products, and all commodities in the U.S. agriculture industry from 1970 to 2024 are displayed in a three-line graph.

Crop Revenues Are Anticipated to Drop in 2024

In nominal terms, crop cash receipts are expected to drop by $16.7 billion (6.3 percent) from 2023 to $245.7 billion in 2024. While receipts for fruits and nuts are anticipated to rise, combined receipts for corn and soybeans are predicted to decline by $17.2 billion.

It is anticipated that corn receipts will decrease by $11.3 billion (14.3%) since increased quantities sold in 2024 should not be outweighed by lower projected prices. The growth in sales volumes for soybean receipts, which are predicted to drop by $6.0 billion (10.3 percent) in 2024, should be outweighed by lower prices. Higher amounts sold are expected to result in a $0.1 billion (1.6 percent) rise in cotton receipts. It is anticipated that wheat receipts will fall by $0.1 billion (0.5 percent) since larger amounts sold will be outweighed by lower prices. Hay receipts are expected to decline by $0.8 billion, or 8.3 percent.

Receipts for Animals and Animal Products Are Expected to Drop in 2024

From 2023 to 2024, total cash proceeds from the sale of animals and animal products are predicted to drop by $4.6 billion (or 1.9 percent nominally) to $239.8 billion. The majority of major animal products are forecast to see a decline in sales, although hog and broiler sales are predicted to be mostly stable.

Due to declining prices, it is anticipated that milk receipts will drop by $0.9 billion (2.0 percent) in 2024. Cattle and calf cash receipts are predicted to drop by $1.6 billion (1.6 percent) as declining sales volumes should surpass price increases. Increases in sales volumes should marginally offset decreases in hog revenue prices, meaning that nominal terms will rise by $0.3 billion (1.0 percent) over the course of the year, but real terms would marginally decline.

In 2024, broiler receipts are anticipated to rise by $0.7 billion (1.6 percent) as a result of greater selling prices and quantity. In real terms, this nominal rise represents a drop. Receipts for turkeys should decrease by $1.4 billion (21.0%) this year due to declining prices. A lower price projection is another reason why cash collections for chicken eggs are predicted to drop by $1.7 billion (12.0 percent) in 2024.

Declining Cash Receipts in 2024 Due to Lower Prices

The change was broken down into two distinct effects in order to better understand the factors influencing the projected change in annual receipts from 2023 to 2024: a "quantity effect" that held prices constant from 2023 and changed quantities to forecast 2024 levels, and a "price effect" that projected the change in cash receipts associated with holding the quantity sold constant at 2023 levels and allowing prices to change to forecast 2024 levels. It is anticipated that in 2024, declining prices will have a negative impact on cash revenues while increasing sales quantities should have a favorable impact. With a projected positive quantity effect of $5.1 billion and an anticipated negative price effect of $26.9 billion, cash receipts are expected to decline by $21.2 billion overall in 2024. Furthermore, estimates for commodities for which price and quantity effects cannot be distinguished individually resulted in a net gain in cash revenues of $0.6 billion. It is anticipated that prices will have a detrimental impact on cash receipts for both crops and animals and animal products. Overall, quantity effects are predicted to be negative for animals and animal products, but favorable for crop cash receipts.
The change in U.S. agricultural cash revenues from 2023F to 2024F is displayed in a bar chart, with price, quantity, and other changes separated out separately.

Agriculture Payments from the Government Expected to Drop in 2024

Payments made by the federal government to farmers and ranchers directly, without the need of middlemen, are known as direct government farm program payments. The USDA usually uses the Farm Bill or similar authority to administer the majority of direct payments to farmers and ranchers. Additionally, supplemental programs approved by the US Congress may provide funding for direct payments. USDA loans (reported as a liability in the farm sector's balance sheet) and Federal Crop Insurance Corporation (FCIC) indemnity payments (recorded as a separate component of farm revenue) are not included in government payments. From 2023 to 2024, direct government farm program payments are expected to drop by 15.9% ($1.9 billion). Lower projected payments from the Emergency Relief Program (ERP) and other supplemental and ad hoc disaster aid are the primary cause of this overall decline.

The estimated $5.9 billion in supplemental and ad hoc disaster aid payments for 2024 is a fall of $1.2 billion (17.4%) from 2023, mostly due to lower anticipated payments under the Emergency Relief Program. Since 2020, the majority of direct government contributions have gone toward supplemental and ad hoc catastrophe relief.

It is anticipated that conservation payments from the USDA's Farm Service Agency and Natural Resources Conservation Service (NRCS) financial support programs will total $4.0 billion in 2024, up $441.2 million (or 12.3%) from the estimated figure for 2023. A small increase in acres enrolled in the Conservation Reserve Program, an increase in payments from NRCS programs, and some anticipated payments from money set aside for USDA's conservation programs by the Inflation Reduction Act are the reasons for the increase in conservation payments.

It is anticipated that the Dairy Margin Coverage Program (DMC) will pay out $264.5 million in 2024—a $0.9 billion decrease from 2023. Because of the decline in milk prices, DMC payments reached a record high of $1.2 billion in 2023.

It is anticipated that the combined farm bill commodity payments made under the Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) programs will decrease. When real crop revenue falls below a predetermined threshold, the ARC program pays income support. It is anticipated that ARC payments will total $39.1 million in 2024, down from $270.4 million in 2023 by $231.3 million (85.5%). Commodity prices are probably going to stay higher than what is required to cause sizable ARC payments, even with the anticipated decline in market prices. When the effective price of a covered commodity drops below its effective reference price, the PLC program pays income support. PLC payments are anticipated to reach $40.8 million in 2024, up from $7.9 million in 2023—a $32.9 million increase. Due to lower anticipated prices for long-grain rice, seed cotton, and grain sorghum in 2024 compared to 2023, PLC payments are anticipated to rise in 2024.

Production Costs Are Expected to Rise in 2024

Production costs in the farm sector, including operator housing costs, are projected to reach $455.1 billion in 2024. Compared to their level in 2022, the expenses are predicted to have climbed by $9.8 billion (2.3 percent) in 2023. In 2024, the expenses are expected to rise by an additional $16.7 billion, or 3.8 percent. However, manufacturing expenses are expected to have increased by 1.6 percent from 2023 to 2024 and declined by 1.3 percent from 2022 to 2023 when adjusted for inflation.

Three of the biggest spending categories in 2024 are anticipated to be feed, labor, and purchases of animals and poultry.

The largest single spending category, feed costs, is expected to remain below the record-high level of 2022, coming in at $79.9 billion in 2023 and $80.6 billion in 2024. Conversely, it is anticipated that labor costs (including noncash employee compensation) will increase by $2.2 billion, or 5.3%, to $44.1 billion in 2023. In comparison to 2023, labor costs are expected to increase by an additional $3.3 billion (7.4%) to $47.4 billion in 2024. The cost of livestock and poultry is expected to have increased to $41.1 billion in 2023, an increase of $6.5 billion (18.8%). In 2024, the growth is predicted to drop down to $3.3 billion (8.0 percent) to $44.4 billion.

Compared to their levels in 2022, three additional expense categories are anticipated to vary significantly in 2023 and 2024:

It is anticipated that nominal interest expenses (including expenses related to operator homes) will rise sharply in 2023, rising by $10.1 billion (41.8 percent) to $34.2 billion. This represents increased interest rates as well as overall debt levels in 2023. Interest costs are predicted to rise nominally in 2024 but to decline when inflation is taken into account, staying roughly the same as in 2023.

Due to lower fertilizer costs, fertilizer expenses (including those for lime and soil conditioner) are expected to have decreased significantly in nominal terms in 2023 compared to 2022, decreasing $6.5 billion (17.5 percent) to $30.4 billion. It is anticipated that fertilizer costs will rise by 4.3% in 2024 compared to 2023 levels, but they will still be lower than 2022 levels (in nominal terms).

Due to drops in energy prices, fuel and oil expenses are predicted to have decreased by $2.2 billion (11.7 percent) in 2023 and by an additional $1.2 billion (7.4 percent) in 2024.

Source: https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/farm-sector-income-forecast/