(Bloomberg) -- American farmers will see a far less severe drop in their earnings this year than expected, according to the government’s latest forecast, as tight supplies boost the value of eggs and livestock.
Farmers’ overall incomes are set to fall only 4.4% in 2024, to $140 billion, the US Department of Agriculture said Thursday. The agency in February had predicted a whopping 26% drop, the biggest income slump since 2006. The rosier outlook comes even as corn and soybeans, America’s two biggest crops, have plummeted in value amid robust global harvests.
The USDA’s revision was driven in part by a squeeze on the supply of chicken eggs due to bird flu, as well as less available livestock raised for meat. The agency, which initially forecast a decline in animal product receipts this year, now expects an increase of $17.8 billion, or 7.1%, compared to last year.
Producers of chicken and pork have seen a quick rebound in profits after last year’s plunge as abundant supplies of corn and soybeans have reduced the cost of feeding birds and hogs at a time when consumer demand is surging. Average cattle prices have surged to a record in 2024 amid the tightest supplies in seven decades.
Meanwhile, the USDA last month said it sees the price for a dozen eggs rising to $2.71 this year, up from $1.92 in 2023. Producers have been culling millions of chickens as cases of bird flu spread across the country.
Another reason for the higher forecast is a decline in the cost of essential farm inputs, most notably animal feed, fertilizer and pesticide, Carrie Litkowski, an economist at the USDA’s Economic Research Service, said in a live-streamed discussion after the release of the forecast.
American farmers have also been turning more thrifty, cutting back on everything from fertilizer to equipment, as ample crop supplies and weak demand have pushed grain prices to the lowest levels in four years. Still, US farm income reached the highest levels ever in recent years. If the new estimate is realized, it will be 15% above the 20-year average, though 28% below the 2022 record in inflation-adjusted dollars, the USDA said.
The agency also is forecasting a slight rise in farm bankruptcy rates in 2024, at about 1 such filing per 10,000 farms.
--With assistance from Gerson Freitas Jr. and Tarso Veloso.
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