Stronger dairy sales boost farm income while crop prices drop
The USDA's final forecast for 2024 reveals a better-than-expected outlook for farm income. Initially, a 25% decline was projected, but new data shows only a 4% decrease, keeping farm income well above the 20-year average.
Carrie Litkowski, senior economist at the USDA, explained that expenses for items like feed and fertilizer were lower than expected, positively impacting farm income. “Each (forecast) release, they got a little bit lower which helps farm income,” Litkowski said, reflecting the impact of lower input costs on farm profitability.
One of the key drivers for improved farm income in 2024 is the strong performance of dairy and livestock sales. Dairy profits have surged, with milk prices rising nearly 12% throughout the year. Egg sales also saw a remarkable 40% increase, boosting overall livestock income by more than 8%.
However, crop sales were down, with the USDA predicting a 9% decline in crop cash receipts. While total crop sales increased, lower commodity prices were the main contributor to the downturn. In Wisconsin, the weather played a significant role in farm profits, as those with better yields fared better than those impacted by dry conditions.
As farmers prepare for 2025, Tigert from Compeer Financial suggests that while interest rates and commodity prices are stabilizing, uncertainties regarding global trade and U.S. political changes may influence markets. He advises farmers to secure forward contracts and lock in costs to protect against future market volatility.