Farm Income To Fall As Costs Continue Rising
By Marlee Moore
With farm income forecast to fall 16% and costs slated to increase more than 4%, Alabama farmers are tightening their belts for 2023.
“Labor’s an issue everywhere, regardless of what industry you’re in,” said Cherokee County row crop and cattle farmer John Bert East, who serves on the Alabama Farmers Federation state board. “With expenses fluctuating, people aren’t trying to lock in their supplies. There’s a lot of uncertainty, but a crop will be planted. It always has been.”
Rising interest rates and lower commodity prices forecast a perfect storm for farmers, said the Federation’s Chris Prevatt.
“The Federal Reserve is hiking its rates, and farmers could be looking at higher percentages on their loans,” said Prevatt, a commodity director for the Federation. “That could erase all the profit that existed in the first place.”
Those and other economic factors contributed to the U.S. Department of Agriculture (USDA) Farm Sector Income Forecast, which predicts total national farm income will decrease by $25.8 billion. Expenses are projected to increase by $18.2 billion. That’s after a record increase of $70 billion in production costs last year.
Adding to the challenges, farm sector debt is projected to increase to a record $535 billion.
The confluence of issues is compounded by global conflicts, said Prevatt, who works with the Federation’s beef, hay & forage, sheep & goat, and equine divisions.
“We need a big crop of wheat and corn to bring down feed prices,” he said. “Ukraine is normally a major player, but they are only exporting corn. On top of that, those exports are just 50% of their normal levels.”
Prevatt said fuel prices will likely remain volatile. Meanwhile, fertilizer cost has trended downward.
“We’re down about 35% from spring 2022 highs on many fertilizer products,” Prevatt said. “But we still have to remember that China produces twice as much nitrogen as the U.S. Things could change very quickly with our domestic resources.”
The pressure pushes cost-conscious farmers to seek high yields with fewer inputs, Prevatt said.
Some farmers have retired after decades facing tough financial decisions.
Take Phil Vandiver, who retired from row cropping two years ago to focus on work as county commissioner in increasingly urban Madison County.
“This is really the second housing boom I’ve seen in my lifetime,” said Vandiver, 60. “There’s no doubt it’s putting a strain on agriculture here.”
Seed prices, treatment costs and land prices have magnified the strain.
Down the road from Vandiver, Rodney Moon said local agricultural cash rents are $150-200 an acre (considerably higher than the state’s more rural areas). Meanwhile, an acre of Madison County land destined for development sells for $30,000-plus.
“Land is a scarce commodity here and always has been,” said Moon, 71, who retired in 2023 following his 50th crop. “Between seed, fertilizer, cash rent and working the crop, it just adds up rapidly. The only hope is a decent price and a high yield.”
While noting struggles, Vandiver said his faith in agriculture holds.
“In all my years of farming, there have always been challenges,” Vandiver said. “I think the farmers out there are smart enough and driven enough that they can overcome those challenges, but they need help from ag lenders, the Farmers Federation and input providers. I still think the future of agriculture is strong.”