Thursday, April 18, 2024

2024 Agriculture Outlook

Key takeaways as part of the 2024 Georgia Ag Forecast are that the broader U.S. economy likely will experience a slowdown along with lower price inflation. Food and commodity prices also are expected to return to pre-pandemic levels.

The most recent U.S. Department of Agriculture farm income forecast, which indicates falling output prices, signals lower revenues across the board for crops and livestock. Coupled with slightly increasing costs, the nation’s farm income is expected to decline by 17% between 2022 and 2023.

Georgia’s 2023 net farm income is likely to return to the 10-year average of about $3 billion.

Potential upsides for Georgia are the possibility of higher demand for poultry, cotton and peanuts from domestic and overseas markets.

Risks to this forecast are higher input costs, geopolitical risks, cheaper imports of some commodities and a global economic slowdown.

U.S. Agricultural Economy

The annual U.S. agricultural outlook from the U.S. Department of Agriculture indicates the following:

Production is projected to grow among five of the eight major crops, including upland cotton, soybeans, wheat, corn and rice during the projection period (2024–2033). Declines are expected for oats, barley and sorghum. Despite reduced or flat acreage for most crops during the projections, yield growth either pulls production either higher or limits the rate of production decline.

Prices of all the crops remain steady or decline before stabilizing early in the projection period. This follows the record or near-record price environment during 2021 and 2022. Prices were very elevated because of strong demand, and there were production problems for many crops in 2021 and/or 2022.

Net returns (revenues minus variable costs) per acre are significantly lower during the projection period for all crops after record levels for most of these crops were realized in the high-priced environment of 2021 or 2022. This is because prices initially decline and then stabilize. Changes in net returns are mixed, with barley, corn and oats rising over the projection period, while the other crops experience moderate declines.

U.S. crop exports are expected to remain steady or increase to various degrees over the next decade. The exception is soybean meal, which is projected to show an aggregate decline of 2.5%, but from elevated levels. Exports of corn, soybeans, wheat, rice and upland cotton are expected to rise steadily over the projection period, but none reach record volumes.

Farm Income

Separately, USDA also forecasts that farm sector income is expected to fall in the near-term, after reaching record highs in 2022. Net farm income, a broad measure of profits, reached $182.8 billion in calendar year 2022, increasing $42.4 billion (30.2%) from 2021 in nominal dollars. However, in 2023, net farm income is forecast to decrease by $31.8 billion (17.4%) from 2022 to $151.1 billion. Key changes between 2022 and 2023 include:

Falling cash receipts for both crops and livestock (about a 5% decline), primarily from falling prices.

Increasing total production expenses, especially interest and livestock/poultry expenses (about 3.5%).

Declining government payments (22.3%).

Article by UGA Extension as part of the 2024 Georgia Ag Forecast series.

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