Arkansas net farm income decline projected to continue in 2024
The report said that the state’s projected 15 percent drop in net farm income is smaller than the forecasted 25.5 percent decrease in U.S. net farm income for 2024.
By Mary Hightower
U of Arkansas System Division of Agriculture
April 2, 2024
Fast facts:
- New report from RaFF released
- Farm income continues descent from record high in 2022
- Farm expenses expected to decline in 2024
(609 words)
(Newsrooms: With graphics from report; art of Biram )
LITTLE ROCK — Arkansas’ 2024 net farm income is expected to fall $0.5 billion from 2023 levels, according to a report Tuesday from the Rural & Farm Finance Policy Analysis Center.
The “Spring 2024 Arkansas Farm Income Report” has two Arkansas authors, Hunter Biram and Ryan Loy, both extension economists for the University of Arkansas System Division of Agriculture. Additional authors are John Kruse, of World Agricultural Economic and Environmental Services, LLC; and TaylorAnn Washburn of the University of Missouri.
The report said that the state’s projected 15 percent drop in net farm income is smaller than the forecasted 25.5 percent decrease in U.S. net farm income for 2024.
“After record-setting farm income in 2022, Arkansas saw a backpedal in 2023 that is projected to extend into 2024 with another $0.5 billion decline in net farm income,” the report said.
“The No. 1 thing driving the drop of income is lower prices for crops across the board,” Biram said, thanks to abundant harvests of soybeans and corn in Brazil and United States in 2023.
“We have a lot of stocks on hand across most commodities right now which is driving a lot of that drop in crop receipts," he said.
The report said crop receipts are estimated to decline by $0.5 billion as many crop and livestock prices are projected to move lower in 2024.
Biram said the model used in this analysis “is expecting one or two cuts in the interest rate this year, resulting in lower interest expense. Fuel and fertilizer expenses are expected to fall too.”
However, “lower crop expenses and lower crop prices kind of cancel each other out.”
Pumped by emergency payments
“What made 2022 farm income relatively high was all the government payments from emergency relief programs,” Biram said.
PLC, or Price Loss Coverage, is trigged when marketing year average price of a covered commodity is less than the respective effective reference price.
Biram said that while the data for the analysis is projecting long grain rice to fall
below the $14 reference price, “one strong caveat is that this model is stochastic
which means is that there are many difference prices that are projected and an average
is taken across those prices.
"While there is a low chance of the long grain reference prices falling below $14
per hundredweight, there’s a much higher chance that the average price will be above
the reference price and not trigger PLC payments," he said.
Biram is also expecting there to be little chance for ARC –- Agriculture risk program –- payments.
On the plus side, the report said that “production expenses are projected to offer some relief with a nearly $0.6 billion decline as feed and fertilizer move lower. Although net farm income has declined from record levels, estimated 2024 levels are still higher compared to 2021.”
Livestock sector
Livestock receipts are expected to decline $0.4 billion in 2024 on lower prices for broilers, turkeys and eggs.
Cattle and calves receipts are expected to decline only slightly in 2024, as higher prices help offset lower supplies. Continued projected higher prices in 2025 and 2026 will drive cash receipts higher.
Partnership
The Rural and Farm Finance Policy Analysis Center at the University of Missouri was launched in March 2022. RaFF is closely aligned with the Food and Agricultural Policy Research Institute at the University of Missouri. The center works in partnership with other states to provide objective policy analysis and inform decision-makers on issues affecting farm and rural finances. The center produces farm income projections for states and regions that are consistent with each other. Cooperation with participating states brings local expertise to enhance model design and estimates.
To learn about extension programs in Arkansas, contact your local Cooperative Extension Service agent or visit www.uaex.uada.edu. Follow us on X and Instagram at @AR_Extension. To learn more about Division of Agriculture research, visit the Arkansas Agricultural Experiment Station website: https://aaes.uada.edu. Follow on X at @ArkAgResearch. To learn more about the Division of Agriculture, visit https://uada.edu/. Follow us on X at @AgInArk.
About the Division of Agriculture
The University of Arkansas System Division of Agriculture’s mission is to strengthen agriculture, communities, and families by connecting trusted research to the adoption of best practices. Through the Agricultural Experiment Station and the Cooperative Extension Service, the Division of Agriculture conducts research and extension work within the nation’s historic land grant education system.
The Division of Agriculture is one of 20 entities within the University of Arkansas System. It has offices in all 75 counties in Arkansas and faculty on five system campuses.
The University of Arkansas System Division of Agriculture offers all its Extension and Research programs and services without regard to race, color, sex, gender identity, sexual orientation, national origin, religion, age, disability, marital or veteran status, genetic information, or any other legally protected status, and is an Affirmative Action/Equal Opportunity Employer.
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Media contact: Mary Hightower
mhightower@uada.edu