Nebraska farm income prospects in 2024 look to drop sharply from 2023, with further declines projected in 2025. It’s not unexpected. Lower commodity prices for most ag commodities coupled with high production costs are putting pressure on operating margins and the financial outlook for agriculture. Although the outlook and sentiment may be lower, the drop comes from record farm income in Nebraska in 2023, and current projections still are strong compared with long-run averages for the state.

The forecasts come from a collaboration of the Center for Agricultural Profitability (CAP) at the University of Nebraska-Lincoln and the Rural and Farm Finance (RaFF) Policy Analysis Center at the University of Missouri.

The latest forecast released in October projects farm income for Nebraska in 2024 at $7.7 billion, down from the record level of $9.3 billion estimated for 2023, but still substantially above the average of the last 10 years of $5.3 billion in nominal terms, or $6.2 billion in real 2024 dollars. Early projections for 2025 point to continued downward pressure on net farm income with a more modest drop to $7.4 billion. The numbers are based on USDA Economic Research Service data for Nebraska through 2023 and national projections for 2024, as well as projections and modeling by RaFF and the Food and Agricultural Policy Research Institute (FAPRI), also at UM.

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While the farm income prospects show a Nebraska farm economy that is still strong despite current headwinds, some analysis by sector helps identify current strengths plus challenges going forward.

Crops

The farm income projections developed by CAP and RaFF show crop cash receipts for 2024 at $12.4 billion, a number that is down more than $1.6 billion from 2023. Prices for major commodities are all projected more than 15% lower for 2024, compared with 2023, driving receipts lower.

Looking ahead shows further challenges, as 2025 crop cash receipts are projected to fall another 4% before gradually improving over the coming decade based on moderating prices and productivity-driven increases in crop yields.

Livestock

Livestock receipts are projected higher for 2024 in the CAP and RaFF report at more than $19.2 billion, a 6% increase over the $18 billion level of 2023 and fully 75% higher than the low of four years ago in 2020. The growth in receipts is primarily a function of the record price levels projected for the cattle sector, as strong demand rations reduced supplies. Hog, dairy and poultry receipts look mixed in 2024 compared with 2023, but Nebraska livestock receipts are almost 90% from cattle and calves, and those prices are up to new record levels in 2024.

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The strong cattle sector looks to continue in the near term as tight inventories support higher prices. Even as Nebraska is projected to start rebuilding cattle inventories and marketings in 2025, strong prices are projected to continue that sustain receipts through 2027, before increased inventories and marketings eventually pull prices back down to levels that would still be high by historical standards. As a result, total cattle receipts look to stay strong over the coming decade, even after falling back from peak levels projected over the next few years.

Production costs

While combined crop and livestock receipts have fallen off in 2024, costs have continued to grow. Production expenses that grew to a record level of $26.6 billion in 2023 are projected to end up even higher for 2024 at $27.2 billion before falling back slightly in 2025 and stabilizing over the next decade. While feed, fuel, fertilizer and pesticide expenses all dropped in 2024, most other expenses continued to climb, including purchased livestock that grew more than $1.4 billion on its own.

Feed, livestock and seed costs are unique in that they contribute to crop and livestock receipts but are also production expenses. Feeder cattle and corn, for example, would be income for some producers but are input costs for other producers. They may largely offset each other in aggregate but matter greatly to individual producers.

Looking ahead to 2025 and beyond, total production costs may finally start falling, but only modestly, as projections are for production costs to stabilize at about $27 billion under current baseline projections. The projections remain subject to a great deal of uncertainty and exposure to outside markets that could affect inputs such as fuel, fertilizer and interest rates. While not yet included in the projections, even the change in the Nebraska property tax credit should have an effect on the numbers as the credit moves from an after-tax income tax credit to a before-tax property tax rebate that would reduce reported property tax expenses on farm and ranch tax returns.

Government payments

Government program payments have contributed substantially to Nebraska farm income in the past few years as trade, pandemic and disaster assistance payments to producers added to commodity and conservation programs already in place. The influx of additional assistance dropped substantially in 2022 and is projected to shrink even more after 2024, barring further ad-hoc disaster assistance passed by Congress or enacted by the USDA. The supplemental and disaster assistance payments have been the largest part of total farm program payments to producers in Nebraska every year since 2018. They are projected to continue at more than $400 million in 2024 before dropping to just over $100 million in 2025, when potential payments would be primarily based on the permanently authorized disaster assistance programs for livestock. The rest of the farm program payment total of about $624 million for 2024 comes from conservation at $145 million and a small but growing amount of more than $50 million for commodity program payments.

Commodity programs are projected to grow substantially in 2025 and beyond as payments increase due to continued commodity price declines. While federal farm policy for 2025 remains a question at the moment, a simple continuation of current farm programs could lead to $300 million in commodity program payments for Nebraska producers in 2025, and more than $500 million the following years before program guarantee levels tied to moving average prices eventually drop and bring down projected support as well. Any future ad-hoc assistance payments would add to the cash flow as well, but unless and until they happen, they do not show up in the projections.

Bottom line

Farm income projections for Nebraska for 2024 are down sharply from the record levels of 2023 but are still strong by historical reference. The aggregate story, however, hides the mixed outlook for a struggling crop production sector dealing with lower prices and a strong livestock sector banking on the strength of high cattle prices.

The outlook for 2025 and beyond suggests more of the same, as aggregate farm income in the state could fall a bit more, and crop and livestock producers continue to experience different outcomes. To succeed, producers will need to continue managing price and production risk, and also work to control costs and manage finances under tightening margin and cash-flow conditions.