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Farm Economy: Challenges Ahead
USDA’s September 2024 farm income forecast projects this to be yet another challenging year for American farmers, who are expected to lose nearly a quarter of their income in two years. Net farm income, a key measure of profitability, is forecast at $140 billion for 2024, marking a $6.5 billion decline (4.4%) from 2023, following a sharp 19.5% drop from 2022 to 2023. Inflation-adjusted figures indicate even greater financial strain, with net farm income expected to fall by $10.2 billion (6.8%) from the previous year.
Many agricultural economists had anticipated USDA would lower its February net farm income projections in light of mounting economic pressures. Instead, the September report revised forecasts made in February up, adjusting the original estimate from $116 billion to $140 billion. This upward revision, which places net farm income above the 20-year average (2004–2023), reflects a smaller decline than initially expected. The February estimate had forecast a steep 25.5% drop from 2023, but the updated projection now shows a more moderate 4.4% decrease. USDA also revised net farm income for 2023 down from $155.9 billion to $146.5 billion, which made the decline in 2024 look less extreme. This shift in estimates is largely attributed to a stronger-than-expected performance in the livestock sector and an expected slight decline in total production expenses.
Despite these improvements, however, broader economic pressures persist. Record costs for labor, interest, and taxes, along with reduced government support, continue to present significant challenges for U.S. farmers, who remain financially vulnerable as they head into another difficult year. The unexpected upward revision would appear to offer some relief, but it may understate the economic hurdles farmers – especially crop farmers – are facing in 2024.
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