This past February, I was fortunate to attend the USDA’s 100th Annual Agricultural Outlook Forum in Washington, D.C. The theme for 2024 was “Cultivating the Future” and with that in mind, Secretary Tom Vilsack opened the event with a keynote address underscoring USDA’s progress in creating a new model that allows agricultural producers of all sizes to thrive.
Next, several economists from the USDA Economic Research Service (ERS) discussed the outlook for 2024.
Several challenges facing the agricultural sector became apparent, and I regret to say still remain a concern as we enter the midpoint of the year:
- INTEREST RATE INCREASE. After several rate hikes in 2023, the Federal Reserve plans to maintain a higher target rate until the latter half of this year — which should avoid a severe recession. While cuts may begin to occur, this means interest rates will remain elevated throughout the year, causing farmers to tighten budgets rather than take term loans.
- INFLATION IS SLOWING. In 2023, food inflation showed a significant slowdown with a year-over-year increase of 3.3 percent. These numbers are moderate compared to 2022 — which saw an 11.8 percent increase — so inflation is still an obstacle. The 2024 food price outlook is still uncertain, with some projections showing a 7.8 percent increase.
- NET FARM INCOME. The USDA estimated a 20 percent drop in inflation-adjusted net farm income in 2023 due to lower commodity prices, higher input costs, and reduced government payments. Despite the decline, the outlook is still considered historically strong, with agricultural economists anticipating a moderate dip in net farm income in 2024, approaching the five-year average.
- FARM INPUT COSTS. Agricultural input costs have been rising, affecting farmers’ operations and ability to compete. Some reasons for these increases include persistent supply chain issues, inclement weather, trade conflicts, increased demand for crop inputs, and inflation. These rising costs can put smaller farmers at risk of not being able to afford supplies or make a profit. They can also threaten food security and lead to higher costs for consumers.
Stagnant or declining crop prices and elevated input costs highlight the importance of farm management factors such as risk management, marketing, diversification, and production efficiency that enhance income and reduce costs — and contribute to more favorable or above-breakeven margins for major field crops. Farm input prices for 2023 showed minimal change from 2022, with the substantial 14.1% decrease in fertilizer prices being offset by increases in other inputs like labor and interest cost. This trend is expected to continue in 2024, with overall total cost projected to have minimal increases compared to previous years. Elevated input costs combined with lower cash receipts, could indicate a margin squeeze ahead for farmers
- FARM BILL IS DELAYED. The 2018 farm bill expired on September 20, 2023, and lawmakers passed a one-year extension in November 2023. Here we are in July and as usual the debates continue on the price tag of the bill’s two largest programs-nutrition and conservation.. A report completed last year from the U.S. Senate Committee on Agriculture, Nutrition, and Forestry stated that only 19% of the Farm Bill spending falls into farmer-related programs such as crop insurance, income support programs, and voluntary incentive-based conservation programs. We all must remember the basic function of the Farm Bill when it was first designed in 1930 with three main goals: to keep food prices fair for farmers and consumers, ensure an adequate food supply, and protect and sustain the country’s vital resources.
The economy is slowing, but there are several ways farmers can mitigate these challenges and grow more resilient moving forward. Please go to the USDA Risk Management website and educate yourself on your options. https://www.rma.usda.gov/en/Topics/Manage-Your-Farm-Risk The FVC Call Center is always here to provide support and can be reached at 855-382-3275 (855) FVCFARM or support@farmvetco.org.
As I sat down to write this newsletter, it is a week after the assignation attempt of former President Donald Trump. Despite political affiliation, there are strong emotions from the citizens who cannot believe that this could happen in our country. It is even more unsettling for members who are already dealing with career transitions, financial concerns, and farming issues. I sometimes wonder how farmers can even function in these type of environment.
In mentioning this to a mentor of mine, he simply said, “Your members are soldiers, and despite all odds they continue with the mission.” How true is that statement!
The leaders in our country and our faith communities are all asking us to unite together to work through these difficult days and help make our communities stronger ….and that is what we must do. Instead of military or tactical boots, we will put on our muck or cowboy boots and keep taking one step forward …together.
Please know that you are always in my thoughts and prayers.
Jeanette
