Slumping crop prices will slash U.S. farmer income for the second year in a row. Though the bite in 2024 won’t be as severe as it was in 2023, corn and soybean producers will see the biggest drop, according to estimates released last week by USDA’s Economic Research Service.

ERS forecast net farm income, a broad measure of profit, at $140 billion in 2024, down $6.5 billion, or 4.4% from 2023, not adjusted for inflation. After adjusting for inflation, ERS estimated net farm income will drop $10.2 billion, or 6.8%.

By contrast, in 2023, net farm income plunged 31% from a record inflation-adjusted $196.4 billion in 2022. The latest figures from ERS also offer a less-dire picture compared with the agency’s previous outlook, released in February. At that time the agency forecast a 26% tumble in 2024 net farm income. Estimated 2024 income is still 15% above the $121.5 billion inflation-adjusted average for the past 20 years.

The revision primarily reflected higher-than-expected prices and cash receipts for livestock and livestock products, as well as lower input costs for some agricultural sectors, ERS economist Carrie Litkowski said last week.

Stronger livestock prices fuel revised forecast

USDA’s most-recent World Agricultural Supply and Demand report, released in August, “showed much stronger prices for most of the animal commodities,” Litkowski said. The ERS now expects animal and animal product receipts to increase about $18 billion, a significant uptick from what the agency estimated about six months ago.

Additionally, the ERS revised its earlier forecast for production expenses across agriculture. “Now we’re saying that, in total, production expenses are going to decrease,” Litkowski said.

She added that price data collected over the past six months “shows that for some commodities, prices are actually declining,” citing feed as an example. Total animal and animal product receipts are forecast to increase $17.8 billion, or 7.1%, led by eggs, cattle and calves, milk and broilers.

Cash receipts for grains and soybeans, however, likely will drop sharply, as the ERS expected early this year. Total crop receipts in 2024 are expected to plunge $27.7 billion, or 10%, from 2023, led by a 22% drop in corn receipts and a 16.7% slide in soybeans.

Record harvests pressure corn, soybean prices

American grain and soybean farmers are grappling with an income squeeze after record or near-record harvests in recent years boosted global supplies and sent crop prices tumbling. As recently as August, corn and soybean futures were both trading near four-year lows and were at roughly half their 2022 peaks.

Prices rebounded in early September but remain below break-even levels for many farmers. December corn futures settled around $4.11 per bushel on Thursday, the day of the ERS webinar, while November soybeans closed around $10.24 per bushel.

In August, USDA forecast this year’s soybean crop at a record 4.59 billion bushels, up 10% from 2023. Corn production was forecast at 15.15 billion bushels, just slightly under last year’s all-time high and the third-largest on record.

Another measure of farm profit, net cash farm income, encompasses cash receipts from farming, as well as cash farm-related income, including federal government payments, with cash expenses subtracted. It does not include noncash items, including changes in inventories and economic depreciation.

ERS forecast 2024 net cash farm income at $154.1 billion, down $12 billion, or 7.2%, from 2023 in nominal dollars. When adjusted for inflation, 2024 net cash farm income is forecast to fall $16.3 billion, or 9.6%, from 2023.