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Farm profits projected to be 25 percent less in 2024
 
By Doug Graves
Ohio Correspondent

COLUMBUS, Ohio – At a time when the cost to grow their crops keeps going up, farmers throughout the country are forecast to see a 25% drop in net income in 2024, according to the USDA. Net farm income in 2024 is forecast to decrease further from the 2023 level by $39.8 billion or 25.5 percent, to $116.1 billion.
The projected decline marks the second consecutive drop since record-high farm income levels in 2022 ($185.5 billion). If realized, 2024 net farm income would be below the 20-year average (2003-2022) in inflation-adjusted dollars.
“I would say we’re in a unique situation,” said Daniel Munch, economist for the American Farm Bureau Federation. “There’s never really been sort of this situation in the ag industry, really the broader economy.”
Munch is referring to things that can affect the industry, like the economy post-pandemic, the turnover in the position of speaker of the U.S. House of Representatives, interest rate hikes and the war in the Ukraine. The negative forecast, he said, blames higher expenses, lower prices for their crops and reduced government aid.
“It’s a pretty negative first look going into the next year,” Munch said. “So, across the board, there’s lots of uncertainty. And that’s really what these numbers show, is a lot of uncertainty.”
The forecast of a bleak 2024 for farmers is worrisome to Portage County, Ohio, farmer Chuck Sayre.
“We spent the winter months maintaining what we have and putting in repairs that we need,” Sayre said.
Last year, Sayre purchased a new tractor which cost roughly $500,000.
“It’s doubled in price from that time, but what we get back for our crops is going down, not up,” Sayre said. “Profit-wise we’re at an all-time low. Farming’s always been a roller coaster of ups and downs, but we didn’t expect to receive so little from our crops. We’ll just have to make some adjustments.”
Ty Higgins, senior director of communications for the Ohio Farm Bureau, said, “There’s going to be a tightening of the belt across all of Ohio agriculture.”
Higgins pointed to such things as supply and demand, costs and logistics, foreign markets and foreign trade deals as just a few of the things which will affect a farmer’s bottom line.
“We need to find more trade partners across the globe,” Higgins said. “There are things we need to be doing on the trade front to help farmers get past 2024 and look ahead to see a profit in years to come.”
Kron Farms in northern Vanderburgh Count, Ind., tends to 2,000 acres of land that includes soy and corn. Farm Manager Ben Kron and longtime employee Steve Glaser are anxious for better returns this year over last, but the recent USDA forecast suggests they’ll see a reduced income for a myriad of reasons.
Indiana Farm Bureau President Randy Kron, Ben’s father, said this data is concerning for their families and farm families everywhere, not just Indiana.
“Production costs remain high while payments to farmers for crops and livestock aren’t getting any better,” Randy said. “However, if you’re a farmer you know this industry ebbs and flows.
“Everybody farms a little different,” he said. “We’ve had good, good solid yields. You go into central Indiana, they’ll have phenomenal yields up there. And it just depends what area you’re in.”
Ben Kron said the costs of fertilizer and other chemicals are down, helping to at least partially offset the increase of interest rates, high inflation and certain material costs.
“With USDA forecasts like this, we’ll have to watch our expenses, hold onto our money and push our tractor tires one more year,” Ben said.
Randy echoed this. “Most of us try to stay optimistic while also being smart with our operating expenses,” he said. “You plan for the rainy days so that when you get sun, you’re pleasantly surprised. I try to take these predictions with a grain of salt. We’re near the middle of the season, and things could improve.”
After the three most profitable years in history, corn and soybean farmers are bracing for a slowdown, and the national prognosis for 2024 doesn’t surprise many Illinois farmers. Prices in this state have tanked. Demand from China and other importers has yet to catch up. And storage bins in the Illini state are full of last year’s unsold corn.
“Farmers know that there are more bad years than there are really good years,” agriculture economist Steve Irwin, of the University of Illinois, said. “2024 to 2025 right now is looking like there will be some substantial losses, but we are coming off a very high-profit period.
“The reserves that have been built up over the past three years give farmers a substantial cushion. Supply-demand balances for grains are not historically burdensome at this time. Looking six to 18 months down the road, which is what is top of mind in the market, then things are looking grimmer.
“Anybody who has farmed for any length of time knows that there is a cycle in grain prices. It is hard to predict but prices are not going to stay as high as they have been forever. Farmers are economizing.”
The USDA report is not well accepted in the Bluegrass state where global response to price incentives, stemming from tight global stocks and trade opportunities, has already significantly impacted Kentucky’s agricultural sector.
“Several challenges confront Kentucky agriculture,” said Will Snell, University of Kentucky Department of Agricultural Economics professor. “Increased global production is leading to significant price drops for several important Kentucky commodities like corn, soybeans, wheat and dairy. Also, the global economic slowdown is diminishing the demand for agricultural products. Political tensions and ongoing conflicts abroad are also disrupting key trade routes.”

5/28/2024