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Farmers Buckle Down as USDA Predicts Income Dip

By Marlee Jackson

Just two years after the roller coaster of net farm income reached a record peak, farmers are buckling in for a bumpy ride as profitability is predicted to plummet.

National net farm income is forecast to drop to $116 billion, per the U.S. Department of Agriculture (USDA). Adjusted for inflation, USDA’s prediction is a whopping 40.9% decrease from 2022’s historic high income of $185.5 billion.

“We’ve had $3 and $4 corn before, but we didn’t have these elevated fertilizer, chemical, seed and repair costs,” said John Bevel, who grows row crops in Marshall and Jackson counties. “2024 is not looking very good unless you have really high yields.”

USDA insights help gauge profitability for farmers like Bevel.

In 2024, the national agency expects a decrease in agricultural exports for the third time in five years. The anticipated $8.3 billion decline means exports will total just $170.5 billion. Meanwhile, farm debt is expected to reach $27 billion, a 5.2% increase.

Analyzing those trends is complex, said the Alabama Farmers Federation’s Chris Prevatt. He’s a commodity director and economist who daily scours market data for its impact on farmers.

Market prices and production costs spiked mid-pandemic, he said. Those problems coincided with global issues like the war in grain-giant Ukraine. That conflict spurred an increase in U.S. production, though prices then tanked as Ukrainian grain eventually flooded the market, Prevatt said.

Market prices have fallen across commodities, while overall input costs are increasing for the sixth straight year thanks to global pressures and inflation.

Take Bevel’s farm.

Since the pandemic, chicken litter for fertilizer has increased from $550 a ton to $900 — a 60% increase. Nitrogen shot up 33% to $300. Corn seed increased 25% to around $325 a bag.

Meanwhile, corn hovers around $4 a bushel. That’s near the pre-pandemic price when input costs were considerably lower.

“Corn would need to be $5.25 a bushel just to keep the same pace as input cost increases,” said Bevel, who serves on the Federation’s State Wheat & Feed Grain Committee. “I don’t think anyone is going to be wasting any money, but you still have to take care of the crop so you make a good yield — if we get the rain we need. You can’t cut back too much.”

While plunging market prices trouble row crop farmers, State Catfish Committee member Travis Wilson said subsequent lower feed costs could improve his farm’s bottom line.

Travis raises catfish in Dallas County with his father, Butch, and brother-in-law, Willard Powe. Feed makes up around 60% of their catfish production costs, and that cost has ticked upward in the last five years. Travis secured feed at under $400 a ton in 2019. It’s just below $500 today, though feed reached $550 last year.

Catfish helps keep the Black Belt Region afloat, even as production has become more difficult since the early 2000s when foreign, low-quality fish began flooding the market.

Butch said fluctuations — in price plus supply and demand — mean planning is critical.

“You just live within your means, and you hope that your means are what you thought they’d be 12 months from now (when you get paid),” said Butch, who survived devastating near-20% interest rates of the early ‘80s. “You’re not going to have deflation. This is the new norm.”

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Western Canadian Agriculture: Hard Times Made the World's Best Farmers

Video: Western Canadian Agriculture: Hard Times Made the World's Best Farmers

Western Canadian agriculture produced the most advanced farmers in the world not through abundance but through adversity. The crow rate fell. The wheat price went nowhere. The brown envelopes stopped.

When the subsidies disappeared, the bad farmers left and the good ones stayed. And the ones who stayed could not just grow wheat anymore. They started growing lentils and canola and peas and flax and faba beans. They built crop rotation. They got serious about agronomy because there was no government backstop. That process produced the Western Canadian agriculture Dennis Bulani describes in this clip: the most advanced, most educated farming culture in the world.

His contrast with Iowa corn and soybean farmers is sharp. At a DeKalb farmer meeting in Okoboji, Iowa, he asked what crop rotation they ran. Beans on corn stubble, corn on bean stubble. How do you fertilize? The co-op agronomist handles it. Have you considered other crops? No need. We make so much money on corn and soybeans. Western Canadian agriculture was never allowed that comfort. And now those Iowa farmers are watching soybean markets lock up with China and corn prices slide, and they do not have the agronomy knowledge or the research base to pivot. Western Canadian farmers adapted on a dime because they had done it before.

Dennis also makes the case that Western Canadian agriculture keeps adapting in real time. Low commodity prices over the past year have pushed growers to look seriously at precision spot-spray technology. He knows a neighbor who bought a sprayer with the seeing-eye system and sprayed only 80 out of 320 acres. As a chemical retailer Dennis acknowledges that will affect his sales. He supports it anyway, because if it advances Canadian agriculture and makes farmers money, that is a good outcome.

The lesson Dennis draws from the tale of two farms: continuous improvement is the only durable strategy. When canola was $22 a bushel some growers went to Arizona instead of the Crop Production Show. When the price came down those same growers came back to the research and the discipline. Products do not go on Rack Petroleum's shelves unless they pass a replicated trial first. That is what Western Canadian agriculture built through hard times: farmers who do the work whether the times demand it or not.

Dennis Bulani is CEO of Rack Petroleum and Ultimate Yield in Biggar, Saskatchewan. Dan Aberhart hosts GTF Productions, Western Canadian Agriculture's foremost live briefing platform and its foremost AI training platform for ag operators