Fast facts:
New report from RaFF released
Farm income continues descent from record high in 2022
Farm expenses expected to decline in 2024
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.
Extension economist Hunter Biram was among the authors of the April 2, 2024, farm income report. (U of A System Division of Agriculture photo by Mary Hightower)
“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.
