The latest estimates on 2024 farm income from USDA’s Economic Research Service are out, with overall farm-sector income down but revenues on egg farms substantially higher than last year.

Net cash farm income is forecast to fall in 2024 by $12 billion or 7.2%, compared to 2023, while net farm income will fall $6.5 billion or 4.4%. However, ERS projects egg cash receipts up $6 billion or 35.2% from last year. (Net farm income, unlike net cash farm income, includes adjustments to inventory values, depreciation and other items. Net farm income is a better overall indicator of economic health, while net cash farm income is a better indicator of free cash flows and debt service capability.)

The income declines are less than forecast in February, largely because the value of animal agriculture production is now forecast to increase rather than decline, while total expenses are now forecast to decline modestly rather than see a small increase, as was predicted in February. Farm income hit an all-time record in 2022.

Farm cash receipts are forecast $9.8 billion lower, a 1.9% decline. However, animal and animal product receipts are forecast to increase by $19 billion, led by a large increase in egg receipts; nevertheless, the increase is more than offset by a forecast decline of $25.6 billion in crop receipts. Meanwhile, ERS sees government payments falling by 15.1% or $1.8 billion, while production expenses will fall 1% or $4.4 billion.

The decline in crop receipts is driven by lower revenue for corn and soybeans, down 22% and 17%, respectively. On the livestock side, ERS forecasts a 35.2% increase in egg receipts and single-digit increases for other livestock categories, including a 6.7% increase in dairy receipts. Eggs account for $6 billion of the total increase in livestock receipts.

With respect to net cash farm income (revenue less expenses), “poultry farm businesses” are forecast to see an increase of 11.7%, while dairies’ income will increase 47.2%, in both cases reflecting not only higher revenues but also lower feed costs. (ERS does not break out poultry farm businesses into eggs, broilers and turkeys.) On the expense side, the largest category overall is feed expenses, which are expected to decline along with crop prices, while labor and interest costs will increase.

The story is more positive for the farm balance sheet than for the income measures. Total farm equity is forecast to rise 3% despite the decline in income, as land prices continue to rise. (Real estate is about 80% of total farm assets). Debt-to-equity and debt-to-asset ratios are below their 10-year averages, a healthy sign, but the debt service ratio (the share of production revenue used for debt payments) is forecast to rise, as is the bankruptcy rate. Both, however, remain at relatively low levels.

ERS divides farms into three size categories: residential, in which the primary occupation is not farming; and two categories where farming is the primary occupation – intermediate, with gross cash farm receipts below $350,000, and commercial, with receipts above $350,000. The latter two categories together account for 90% of farm production even though they are only about half of all farms.

For all farm households, median total income (farm and off-farm) will increase 1.7% nominally but decrease 0.7% after inflation. As the chart below shows, the median farm income of all farms (i.e., the level with half the farms above and half below) is negative. (Since half of all farms do not have farming as their primary occupation, this is not surprising.) However, for commercial farms, median farm income is forecast at $134,000, which combined with $62,000 in off-farm income gives these farms a median total income of $219,000.