Farm Economy at a Crossroads: Navigating Between a Hard Fall and Soft Landing

According to the Ag Economists’ Monthly Monitor, a survey conducted among 70 agricultural economists nationwide, there’s growing concern over the future of the farm economy. For 10 consecutive months, this survey has offered insights into the sector’s health, revealing a gradual weakening in economists’ outlooks, particularly regarding the future.

Scott Brown, interim director of the Rural and Farm Finance Policy Analysis Center (RaFF) at the University of Missouri, emphasizes the importance of vigilance in these uncertain times. “As we look ahead, the outlook seems increasingly negative. However, if we see extensive corn planting and achieve trend yields, we might witness further declines in corn prices,” Brown stated, indicating a potentially challenging period ahead for the agricultural market.

The net farm income forecast has seen a significant downturn, stabilizing around $117 billion in March after a sharp decline in February. This figure starkly contrasts with the USDA’s $160 billion forecast for 2023 and represents a 42% drop from the record highs of 2022. “We’re anticipating a sharp decline in farm income for 2024, returning to levels observed in 2020, yet still above those seen between 2015 and 2019,” added Pat Westhoff, director of the Food and Policy Research Institute (FAPRI) at the University of Missouri.

This anticipated drop in net farm income could lead to a variety of outcomes. Some economists fear that producers who adjusted to the high commodity prices of 2021/22 as the new normal might find themselves overextended in the face of a downturn. Corn farmers, in particular, are expected to face significant challenges, with prices potentially falling below production costs for the first time in decades.