by Brianna Gwirtz Smith

For Ohio farmers, 2024 will undoubtedly be a year to remember. For the past few years, farm economists have predicted that 2023 and 2024 would be years of economic downturn. However, a record drought that covered much of the state exacerbated an already dire situation.

The December 2024 USDA Farm Income Forecast predicts a $9.5 billion decrease in farm income in 2024 compared to 2023, considering inflation adjustment. Net cash farm income will fall $5.7 billion, down about 3.5% from 2023.

While these numbers may seem dismal, it is important to remember they are still above the 20-year average.

While at Farm Science Review, Brock Burcham, regional vice president at Farm Credit Mid-America, discussed the state of the farm economy and offered some pointed resources.

Farm Credit Mid-America, a key player in the agricultural industry, is uniquely positioned to provide valuable insights and resources during these challenging economic times.

Digging into details

"Ohio farmers are coming off all-time historical highs for net income," Burcham said. "We saw the net income rise in 2019 to an all-time historical high in 2022. Then we saw a big decline in 2023 for net income."

During that upcycle, many farmers accumulated additional working capital. Burcham expects these additional dollars to be used for operating expenses rather than capital expenditures.

"Record-keeping in years like this is so beneficial and crucial for planning,” he said. “I like to use the analogy that if you're going on a trip, you like to know the weather at your destination, so you can plan accordingly. Now is an important time to dig into the details before you get into the next cycle. Everyone should analyze their input costs and the timing of those expenses."

Burcham also cautioned farmers to examine their grain marketing decisions more thoroughly. While holding on to grain until market prices rise may sound like the best decision, new analytical tools can help provide the complete economic picture.

"Farmers really need to dig deep into their grain carryover,” he said. “Farm Credit Mid-America has spreadsheets that can help better understand how much it costs to carry grain from one year to the next. We have very detailed information to help determine whether it's the best financial move."

Financial advice

With high input and breakeven costs, Burcham recommended navigating the next steps with a trusted financial partner.

"I have been telling farmers to seek advice and reach out to advisers and to make sure to ask a lot of questions," Burcham said.

Farm Credit Mid-America can also create benchmark data to help farmers understand their position compared to their peers.

"It's good to see where you are in relation to your peers because it allows you to rethink your approach to making financial decisions," Burcham said. "I have been encouraging our customers to contact their financial account specialists. Farm Credit Mid-America has tool kits to work through with them.

"We look at various data, including credit factors, solvency, liquidity, current ratios and debt ratios. We can also evaluate their short- and long-term obligations and build out some monthly cash flow tools. Our team is trained to get into the details to help customers when they may need an operating line and how to best budget for their interest expense."

Burcham's best advice is to rely on your team for support during these difficult financial times.

"Don't do this alone," he said. "We are here to help you and guide you.”

In challenging times, planning and partnerships will ensure Ohio farmers weather the storm and thrive in the years ahead.

Gwirtz Smith is a correspondent for Farm Progress.