March 12, 2024
Several U.S. government agencies released some important numbers for agriculture in February. Census of Agriculture numbers, farm income estimates and farm bill budget estimates all help paint a picture of agriculture nationwide, as well as current economic conditions and policy challenges ahead.
USDA released results of the 2022 Census of Agriculture. The once-every-five-years census provides a snapshot of farm numbers, structure, production, economics and demographics.
The big headline nationally this time was a drop in the number of farms below 2 million nationwide, from 2.04 million in the 2017 Census of Agriculture to 1.9 million in the latest census. Nebraska fared similarly, with a drop in farm numbers from 46,000 in 2017 to 44,000 in 2022.
Loss of midsized farms
The drop in farm numbers continues the long-running trend of consolidation in agriculture, particularly in the shrinking number of midsized operations.
The decline in farm numbers provided a backdrop for calls to increase support for small and midsized farms and ranches during the USDA Ag Forum in the week following the release, although there are numerous issues and economic trends behind the numbers that don’t lend themselves to a specific policy prescription.
And agriculture is measured by more than farm numbers, as there are multiple producers on many farms — with a total of 3.3 million producers reported nationwide in 2022, as well as substantial growth in the value of agricultural output, from less than $400 billion in previous census years to more than $540 billion in 2022.
The statistics tell a story of an agricultural sector that nationally continues to produce more total production, even as it does so with fewer but larger farms over time.
Income estimates
In the week before the census data was released, USDA released updated farm income estimates, including its first projections for 2024. The numbers point to a continued and sharp decline from the record farm income reported in 2022.
After reaching an estimated $186 billion net farm income nationally in 2022, projections fell by $30 billion to $156 billion in 2023, a decline of more than 15%. But in reality, it is still the second-highest farm income on record.
The first projections for 2024, however, suggest the sharp decline is continuing, with nearly a 25% drop year over year to only $116 billion, although that number fares favorably to farm income levels over the previous decade.
That dramatic drop over two years may be unprecedented, but so was the run-up from 2020 to 2022, meaning the agricultural sector is living through relatively strong but extremely volatile economic conditions at the present time.
That volatility in income, as well as prices, has generated much of the policy debate over the next farm bill — with calls from many agricultural groups for more support and a stronger, higher safety net. Those calls for more support face major challenges, however, as any legislated increases in the safety net would come with increased costs for farm programs.
The Congressional Budget Office is the arbiter of cost estimates for federal legislation and estimates major spending projections for the various parts of a farm bill generally two times each year.
The most recent farm bill debate started last year, when it was supposed to be the 2023 Farm Bill, based on cost estimates from CBO released in May 2023. Those numbers showed most of the farm bill spending was on food assistance programs (namely the Supplemental Nutrition Assistance Program) and amounted to nearly 85% of total farm bill spending.
The balance was predominately split between commodity programs, crop insurance programs and conservation programs, with every other part of the farm bill together amounting to less than 1% of the total.
More debate
Given that the farm bill was not completed in 2023, but was extended for one year into 2024, the debate should start again soon — but likely under new CBO estimates just released in February, or perhaps another update yet to come this spring.
The February estimates make some modest changes to overall farm bill spending. Nutrition assistance spending declines as assumptions about participation and benefits over the next decade pull back under improved economic projections. Projected commodity program spending declines a little, as well, based on some higher price projections over the next decade as compared to the projections used last year.
But crop insurance costs go up substantially as higher prices translate into higher insured values, higher premiums and higher federal support. Insurance costs also go up for livestock products based on higher participation in recent years that is projected to continue growing.
The revised budget costs don’t necessarily force policy changes in the next farm bill. The budget projections from CBO generally provide estimates of what current programs would cost over the next decade if they were simply kept in place, and that is where the farm bill debate starts. Thus, any farm bill proposals to simply keep existing programs are effectively budget neutral when compared to the baseline.
It is the proposed changes to policy, whether to strengthen the farm program safety net or to add or expand other programs in the farm bill, that would cost money and require new funding. Conversely, it is the various proposals to cut programs, such as some calls to reduce conservation spending, food assistance spending or some discretionary spending by the secretary of agriculture that would be estimated to save money or provide a source of funding for other priorities.
That balance between what if anything to cut and what if anything to increase is the difficult challenge of any farm bill. The current challenges of even initiating formal debate on the farm bill only suggest how difficult those challenges will be.
Lubben is the Extension policy specialist at the University of Nebraska-Lincoln.
Read more about:
Farm BillAbout the Author(s)
You May Also Like