Rising labor costs and other expenses are increasing for farmers in 2024 as they also navigate declining income from a depressed agricultural market.
By the end of 2024, farm labor expenses, including cash and non-cash employee compensation, will climb 6% to $51.8 billion from a year ago, according to the U.S. Department of Agriculture. Livestock and poultry purchases are forecast to grow 10% to $47.4 billion, representing the largest dollar increase relative to last year.
Interest costs also increased $1.3 billion in 2024, though the Internal Revenue Service suggests those expenses could start moving downward next year. While rent remained roughly flat, property tax expenses rose by close to $2 billion.
Despite rising costs in some areas, overall farm expenses are projected to decline this year to $453.9 billion, a nearly 2% drop from 2023, according to USDA’s recently updated Farm Sector Income Forecast. The decline is driven by weaker prices for feed, fertilizers, pesticides and fuel and oil. The cost of feed, which is the largest expense for farmers and ranchers, is expected to fall 13% to $69.5 billion over the year prior.
While lower costs may benefit farmers, profit margins remain tight. The USDA reported that net farm income is anticipated to drop by $9.5 billion from last year, reflecting a 6% decrease when adjusted for inflation.
Part of the decline in income is tied to a pullback in direct government farm program payments, according to the Economic Research Service, primarily due to lower payments from the Dairy Margin Coverage Program and lower disaster assistance to farmers and ranchers compared to 2023.
As farmers struggle with lower commodity prices and market volatility, lawmakers are looking to pass a farm bill to ensure some stability in the sector. However, infighting between Democrats and Republicans has slowed progress.
In response to the USDA’s latest farm income revision, leading Republicans on the House and Senate agriculture committees issued a statement, saying “Immediate action is required to stabilize the farm economy and prevent a crisis that will only become more costly to address over time.”