Farmers under increased financial stress.
Wouldn’t it be great if there were a way for farmers to leverage their only real wealth, their land, to diversify their income with drought proof, flood proof, recession proof revenue that was guaranteed for 25 to 30 years?
Yeah that sounds great. Somebody should work on that.
Farmers can expect the largest recorded year-to-year dollar drop in net farm income in 2024. Income is estimated to be nearly $40 billion lower this year compared to 2023, down more than 25%. American Farm Bureau Federation economists analyzed the latest USDA data in a Market Intel.
Net farm income is the profit farmers see after paying for operating expenses. Two major factors are impacting income forecasts – lower prices paid to farmers for crops and livestock, and increased costs for supplies. While these are early estimates and they could change throughout the year, USDA anticipates a decrease in net farm income, moving from $156 billion in 2023 to $116 billion in 2024.
“Farm families are suffering through the same economic hardships as all families in America,” said AFBF President Zippy Duvall. “High inflation is making the food farmers grow more expensive to produce, and is cutting into the income farm families rely on to pay bills, provide an education for their children, and reinvest in their community. We urge Congress to focus on bringing costs down and passing a new farm bill, both of which will help ensure farmers can continue meeting the needs of a growing nation.”
The Market Intel explains, “Cash receipts for crop and livestock sales are expected to move from $507 billion in 2023 to $486 billion in 2024 for a loss of $21 billion (4%). The forecast decline in crop receipts explains nearly 80% of this difference, signaling a weaker incoming year for row crop prices.”
Production expenses remain stubbornly high as well. Transportation, labor, pesticide and fertilizer costs are all hitting farmers’ bottom line. Production expenses are estimated to increase 4%, or $16.7 billion, in 2024, totaling $455 billion in 2024.
At the same time, Republican law makers are looking at ways to cut government payments to farmers.
A proposed 2025 budget from the Republican Study Committee — the largest conservative caucus in the U.S. House of Representatives — would cap crop insurance subsidies a single farmer may receive to $40,000, provide PLC and ARC payments only to farms with gross income below $500,000 and convert funding for the Supplemental Nutrition Assistance Program to state block grants.
The Fiscal Times’ Michael Rainey reported that “the budget has little chance of becoming law but provides a sense of the policies Republicans may pursue if they retain control of the House in 2025, and possibly expand their power to include the Senate and the White House.”
I’m working with farmers like Jeff Ehlert, above, to help them get utility scale wind turbines or solar fields on their land. Jeff benefits from a proximity to a large transmission line and substations, easy for developers to tie in to – important since running transmission from a solar or wind field costs north of a million per mile, if you can get the right of way.
There are other land owners who may not have that proximity, but could still benefit from solar, in particular. Wall Street Journal has a story about how those folks are benefitting from the rising tide of clean energy funding.
Jerry Howle was skeptical about installing a $300,000 solar-panel system on his South Carolina chicken farm. Then he found out he could get it free of charge.
Solar panels now sit on his two chicken houses, powering giant fans that keep as many as 60,000 birds inside cool. The panels are being paid for entirely by subsidies from President Biden’s climate law and will virtually eliminate the farm’s $10,000 annual utility bill.
“It’s a lot of breathing room,” said Howle, 42, whose family in Hartsville, S.C., has been squeezed by rising fuel and electricity costs.
Howle is among the rush of people capitalizing on a wave of federal tax credits, grants and loans for solar power, electric cars and other cleaner-energy alternatives. The $1 trillion in funding is being made available through the climate law, known as the Inflation Reduction Act.
The generous subsidies are making renewable power a possibility in poorer communities like Howle’s, where the poverty rate is more than double the national average. Such projects can sharply reduce energy bills, but their high upfront costs had until recently put them out of reach for many families and businesses.
For farmers including Howle, the law now offers a particularly sweet deal: a combination of subsidies that can cover or even exceed a project’s costs. Tax credits can pay for as much as 70% of costs for small projects like Howle’s. Agricultural grants can pay for a further 50%.
Howle’s project is among the first in a growing number of clean-energy installations whose costs are expected to be entirely paid for by the government. The cherry on top: He could end up making extra money by selling any excess solar power to the local utility.
The Agriculture Department awarded about $465 million in grants through its Rural Energy for America Program in the agency’s fiscal 2023, with the average amount of a grant at roughly $150,000. That is up from nearly $60 million in total grant awards the previous year. Requests for funding from farmers have also surged.
“The demand has just been skyrocketing and there’s a lot of excitement,” said Basil Gooden, the Agriculture Department’s undersecretary for rural development.
That’s seeding the technology into the culture of various ag industries. Trade magazines won’t just discuss a seed variant, the weather, or how to lease a combine, but write articles about the different solar configurations or battery brands.
That’s essentially what subsidies should be for: Launching new tech or practices that are going up against established market systems, product lines and traditions.