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University of Missouri Report Warns Falling Prices Could Squeeze Farmers
Missouri Ag Connection - 03/27/2024

U.S. farm income is falling from record highs as low commodity prices, trade headwinds and higher costs squeeze profits, according to a new report from the University of Missouri.

The 2024 U.S. Agricultural Market Outlook report released Tuesday by the Food & Agricultural Policy Research Institute, also known as FAPRI, is a 10-year projection of the agriculture economy. It examines production trends and pricing for commodity and specialty crops and livestock and discusses issues like interest rates, consumer prices and biofuel production that impact on farming as a whole.

For producers, the news isn’t especially welcome.

“We got lower commodity prices kind of across the board, except for cattle,” said Pat Westhoff, the agricultural economics professor who serves as the institute’s director.

The annual report is eagerly anticipated in the agriculture industry and its findings have extra significance this year as Congress tries to pass a farm bill renewing producer support and food distribution programs.

Net farm income nationally is expected to be about $118.2 billion this year, down from a record of about $162 billion in 2022.

Westhoff said he briefed Congressional staff on the report Tuesday and the reaction was a classic glass half-empty, glass half-full split. Some saw the large decline in farm income as a problem, while others noted that income is expected to remain above the average from 2015 to 2019.

“People were using the same numbers and making the opposite arguments,” Westhoff said.

Missouri is second only to Texas in the number of farms, with 87,887 farms that sold $14.7 billion in agricultural products in 2022, up from $10.5 billion in 2017 according to the Census of Agriculture. Missouri farms also received nearly $1 billion in government payments or other income.

With farm production expenses of $10.7 billion, Missouri farms had net cash income of $5 billion.

The 5,596 largest Missouri farms, with sales of $500,000 or more, sold more than $11.6 billion of products in 2022. The 67,400 Missouri farms with sales of less than $50,000 sold $685 million agricultural products.

Prices for grain and oil crops have fallen dramatically in the past year. Missouri farmers were receiving $14.90 a bushel for soybeans in January 2023, and $6.94 a bushel for corn. According to the monthly agricultural prices report from the National Agricultural Statistics Service, the price received for soybeans in January was $12.90 a bushel and for corn it was $4.79.

The issues facing farmers nationally, Westhoff said, are true in Missouri, where corn, soybeans and wheat are the major cash crops.

The FAPRI report projects the decline in commodity grain prices will slow, but continue.

Missouri farmers get a slightly better price than the national average for corn and soybeans because of proximity to large rivers and industries such as ethanol and biodiesel that buy commodities locally, Westhoff said.

“Where you have crushing facilities for soybeans matters tremendously,” Westhoff said. “Where you have ethanol plants matters as well.”

Missouri produced 264.9 million bushels of soybeans in 2023. A decline of $2 per bushel means the farmers producing those beans received more than $500 million less than they did for the same commodity the previous year.

The sharp decline in market prices for soybeans hasn’t been accompanied by a similar decline in prices for fertilizer, fuel and other supplies, said Casey Wasser, chief operating officer of Missouri Soybeans, the industry lobbying association.

“The input prices have not come down at all with the other prices,” Wasser said. “So that’s where that net farm income is going to hit producers pretty tight.”

Missouri has the nation’s sixth largest cattle herd. It also is home to the sixth largest number of hogs, and its farmers sold the seventh largest number of chickens for meat consumption and had the nation’s 12th largest flock of laying hens.

But Missouri is losing farmers – and farmland – faster than the national average.

The number of farms declined 7.8% since the 2017 farm census while nationally the number fell 6.9%. Nationally, 2.2% of farmland was converted to other uses between the surveys, while in Missouri the acreage in farming declined 2.7%.

The smallest producers are being squeezed the tightest, said Tim Gibbons of the Missouri Rural Crisis Center. In a telephone interview after he spent a day lobbying in Washington for changes in national farm programs, Gibbons said the issues facing farmers go well beyond commodity prices and interest rates.

Control of agriculture continues to be concentrated in large corporations, he said. Farm programs are designed to support cheap commodities and large producers, he said.

“What I’m hearing on the Hill is a joke relative to the situation that is farming in Missouri and in the United States right now,” Gibbons said.

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