FAPRI Report - decline in farm income forecast

By Blake Jackson

A new report by the Food and Agricultural Policy Research Institute (FAPRI) predicts a decline in farm income throughout 2024 and beyond. This comes after a peak in farm commodity prices in spring 2022.

The FAPRI report, known as the annual agricultural market baseline outlook, offers projections for various agricultural sectors. It serves as a reference for policymakers and farmers navigating the volatilities of the agricultural market.

Net farm income is expected to fall to its lowest level since 2020, despite a projected decrease from record highs in 2022. FAPRI director Pat Westhoff highlights the need for historical context. While there will be significant drops, net farm income is still projected to stay above levels observed from 2015 to 2020.

Crop prices, a key factor in farm income, are anticipated to continue declining. This follows near-record highs in the 2022-23 market year. According to FAPRI research economist Bob Maltsbarger, good crop yields in 2023 and potential shifts in planted acreage could further push prices down.

The report also examines farm input trends. Lower fertilizer prices might provide some relief, but not enough to completely offset the decline in farm income.

Livestock producers are expected to benefit from lower feed costs due to reduced corn and soybean prices. However, they will still face challenges related to price and demand. Hog, poultry, and milk prices are expected to continue to decline in 2023 and 2024 due to demand-driven factors. Cattle prices, on the other hand, are projected to rise in 2024 and 2025, supported by factors like drought.

Consumers are expected to see a continuation of the slowdown in food price inflation observed in 2023. The FAPRI report predicts a consumer price index increase for food of 2.1% in 2024, with most of this rise occurring in restaurant and dining out expenses.

FAPRI emphasizes the importance of the baseline report as a data-driven tool for informed decision-making in the agricultural sector. This annual report by FAPRI is a valuable resource for both producers and policymakers as they navigate the complexities of the agricultural market.

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