As of September 2024, the U.S. agricultural economy is grappling with significant challenges, with over 50% of agricultural economists believing it is already in a recession. This sentiment is echoed by a recent survey from the August Ag Economistsā Monthly Monitor, which indicated that nearly 60% of over 70 economists surveyed believe agriculture is on the brink of recession. The USDA forecasts a steep decline in net farm income, projecting a drop from $185.5 billion in 2022 to $116.1 billion in 2024 [13f4613d].
In a recent update, FAPRI released its 2024 Baseline Update, noting that prices for agricultural commodities have sharply fallen from 2022 peaks due to increased supplies and a strong dollar. The report anticipates that projected prices will remain near current levels for the next five years unless new shocks occur. A record 2024 U.S. soybean crop is expected, driven by increased acreage and large yields, alongside a second consecutive 15 billion bushel corn crop [5d224c11].
Corn and soybean prices have plummeted almost 40%, contributing to a decline in Iowa farmers' income by over 25% since 2002. The economic landscape is further complicated by the closure of a Tyson Foods plant and layoffs at Deere & Co., resulting in nearly 2,000 job losses [5b33e301]. Terry Hotchkiss has warned of a looming agricultural economic cliff, while the rural-urban economic divide in Iowa is expected to widen [5b33e301].
The situation is exacerbated by falling U.S. corn prices, which have reached a four-year low, influenced by adverse weather conditions, tariffs, and rising fertilizer costs. While crop prices are under pressure, livestock prices may remain stable despite overarching economic concerns [13f4613d].
Additionally, Brazil has emerged as a major agricultural competitor, selling $58 billion in corn and soybeans to China in 2023, contributing to a U.S. agricultural trade deficit that reached $32 billion for the 2023-24 period [5b33e301]. Chuck Grassley has advocated for free trade, opposing tariffs, while former President Trump plans a 60% tariff on Chinese products, which could further harm Iowa farmers [5b33e301].
Foreign buyers, particularly from South Korea, are actively purchasing farmland in the U.S., often using cash and minimal borrowed funds. This trend reflects a broader global interest in agricultural land, raising questions about the implications for domestic farming [e59acba4].
In 2024, U.S. net farm income is projected at $137 billion, which is $9 billion lower than in 2023. FAPRI reports a $32 billion drop in crop receipts due to lower prices, while livestock receipts are expected to increase by $19 billion. The inflation-adjusted net farm income decline from 2022 to 2025 is anticipated to be $67 billion. Average prices for corn, soybeans, and wheat are projected at $4.12, $9.98, and $5.70 per bushel, respectively, between 2025 and 2030. Food inflation is projected to be 2.2% in 2024, dropping to 1.6% in 2025. Average cropland rental rates and farmland values have increased in 2024, while beef and egg prices are expected to rise, although egg prices are projected to fall in 2025. FAPRI director Pat Westhoff emphasizes the importance of context in assessing these farm income projections [8447bfd2].
Despite these challenges, it is crucial for farmers to focus on capital investments and expenditures to ensure business sustainability. Amidst the pressures of the agricultural industry, finding moments of joy and relaxation can also help maintain mental well-being [e59acba4]. The uncertainty surrounding the Farm Bill extension, coupled with ideological divides in Congress, adds another layer of complexity to the future of U.S. agriculture [5b33e301].