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The Ripple Effect When Farm Incomes Fall

Illustration of coins in field in bar graph shape, reducing in size

What happens on the farm doesn’t stay on the farm. Ask almost any small-town restaurant, implement dealer, or hardware store in America.

Too many Americans pay too little attention to agriculture. Most don’t own a farm, have any relatives who work on one, or prioritize agricultural operations in their investment portfolio. But what is taking place in smaller communities across the country may force more people to focus their attention on farmers’ well-being.

People are far more connected to farm factors than they understand.

Good times don’t last forever, especially not really good times. Farm incomes soared in 2022 (aid from the federal government helped), but they have collapsed since then. Not all farm owners and operators shared in the prosperity, of course. That is always the case.

But numbers show that 2022 was a strong one, a record year, for the industry overall.

RELATED: Agricultural Economic Insights offered some thoughts on 2022’s farm income surge. Read that here.


These numbers from the USDA show a rapid decline in farm incomes since 2022.


US net farm income and net cash farm income, inflation adjusted, 2023-24

The USDA summarized farm income projections for 2022-2024. Here is the synopsis by the numbers:

“Net farm income, a broad measure of profits, is forecast at $116.1 billion in calendar year 2024, a decrease of $39.8 billion (25.5 percent) relative to 2023 in nominal (not adjusted for inflation) dollars. This follows a forecast decrease of $29.7 billion (16.0 percent) from 2022 to $155.9 billion in 2023. After adjusting for inflation, net farm income is forecast to decrease $43.1 billion (27.1 percent) in 2024 relative to 2023. With this expected decline, net farm income in 2024 would be 1.7 percent below its 20-year average (2003–22) of $118.2 billion and 40.9 percent below the record high in 2022 in inflation-adjusted dollars.

Net cash farm income is forecast at $121.7 billion in 2024, a decrease of $38.7 billion (24.1 percent) relative to 2023 (not adjusted for inflation). This follows a forecast decrease of $41.8 billion (20.7 percent) from 2022 to 2023. When adjusted for inflation, 2024 net cash farm income is forecast to decrease by $42.2 billion (25.8 percent) from 2023. In 2024, net cash farm income is forecast to be 13.7 percent below its 2003–22 average of $141.0 billion and 43.2 percent below the record high in 2022. Net cash farm income encompasses cash receipts from farming as well as cash farm-related income (including Federal Government payments) minus cash expenses. It does not include noncash items (including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings) reflected in the net farm income measure.”

Rural town Main Street, U.S.A. was bound to feel this. And it is.

Reuters focused on Kansas and how wheat woes extend beyond the grain field. Kansas grows more wheat annually than any other state in the country.

Lower prices and uncertain demand: navigating choppy waves of wheat markets in 2024” is the title of the podcast by S & P Global in March. The podcast examined falling wheat prices, export changes, and geopolitical factors that impact wheat producers in 2024.

That doesn’t mean that the wheat future is doomed. Real Agriculture explained why some analysts are bullish about what is ahead for wheat prices. Watch that conversation here from a Canadian perspective.    

So, for Kansas communities that means that the situation has been tough for the wheat world, but it could get better as the year progresses?

There are so many factors to consider that don’t get discussed enough in mainstream media or politicians’ talking points. If farm incomes drop by the largest yearly decline ever – like the USDA projects – that could strap smaller communities. Many of them have already experienced decades of population decline.

RELATED: Here is the Reuters article that lays out how falling farm income causes an avalanche of anxiety in other areas. One example is how the owner of “Pete’s” in a small Kansas town can’t afford to turn on his air conditioner at home because farmers aren’t frequenting his restaurant as much as they previously did. Read that here. 


American Farmland Owner Hayfields mountains


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