PIERRE, S.D. (MITCHELLNOW) The sharp decline in net farm income is a pivotal factor in the agricultural economy’s current state. According to the USDA, net farm income in 2024 is forecasted to drop by nearly 25% compared to 2023, falling from $155 billion to $116 billion. This decline marks one of the most significant year-over-year decreases in history and follows a downward trend from the record-high income levels seen in 2022. The decrease in net farm income is primarily due to a substantial drop in cash receipts for crops and livestock and rising production expenses. Specifically, crop receipts are expected to decrease by $16.7 billion, mainly driven by reduced corn and soybean prices.
The reduction in net farm income directly impacts farmers’ ability to invest in new agricultural equipment. With less disposable income and tighter budgets, many farmers are postponing or canceling planned purchases of new machinery.
Farm equipment dealers across the country are feeling the effects. A recent Dealer Business Outlook and Trends Report reveals a notable drop in optimism among equipment dealers. Projections for new and used whole goods revenue are mainly negative, with many dealers bracing for what could be the toughest year since the economic downturn caused by the COVID-19 pandemic.
The used equipment market, which often serves as an alternative for farmers looking to upgrade their machinery at a lower cost, is also experiencing difficulties. Prices for used equipment have been declining as inventories build up, a trend driven by reduced demand and an oversupply of machinery. This situation has been compounded by the recovery of supply chains, which, although positive in some respects, has led to an influx of equipment that now exceeds current demand.
The impact of lower farm incomes will not only be felt in the ag sector but also across retail and Main Streets throughout the state.