Farming is Having its 8th Best Year in the Last 50
Wait, what?
If you follow the news in agriculture, you may have recently seen headlines like “agriculture in the red”, “record drop in farm income” and “another challenging year”. You would be forgiven for inferring that things are rough down on the farm.
Earlier this month, the USDA Economic Research Service published the latest farm income projections for 2024. They project total net farm income of $154 billion, of which $143.6b is slated to come from the market and the remainder from direct government payments. Projected net income is higher than any year before 2011. It is also $70b below the record earnings of 2022.
All these numbers have been adjusted for inflation by converting them to 2024-equivalent dollars.
The decline in net farm income since 2022 has come mostly from a decline in crop income. Projected income from crops is $51b below the 2022 peak, but still greater than any year before 2010 or 2017-2020. Gross income from animal products is projected to be down less than $10b from 2022 and the third highest in 50 years. Government payments are down by $6b.
Corn and soybeans are the two biggest crops in the United States, typically accounting for over half of harvested acres. Prices for these two commodities are down about 50% from their 2022 peaks. Projected cash receipts from corn and soybeans are $43 billion lower in 2024 than in 2022. Most other crop groups show only moderate drops in the past two years.
Total expenses are almost identical in 2022 as 2024, although there is variation across categories. Fertilizer, fuel, and pesticides are down; labor and interest payments are up. Again, this is after adjusting for inflation.
Total net farm income in 2024 will be down substantially from the record highs of 2022, but still substantially above average. Almost all the decline will stem from the drop in corn and soybean prices, so those growers have it worse than most. Overall, pessimism about the state of the farm economy seems to be driven by comparisons to an anomalous boom year rather than the long history.
I made the graphs in this article using this R code.
Update 9/27: Added a link in last paragraph to Purdue analysis of corn belt returns and clarified that corn and soybean growers have it worse than most.
Great post with a necessary perspective.
I think it’s worth highlighting the tale of two cities that you only lightly reference. Grain producers, which are about 270M acres and 320k farms, are getting hit hard by commodity prices relative to input costs, and are on average operating below cost of production right now. The rest of the farm sector is faring much better, some only slightly down and others up.