Finance-Accounting

The AI Advantage: How 1 Million Enrolled Acres in 10 Days Signals a New Era for Farm Financial Management

Tue, 28 Apr 2026 19:47:08 GMT

In a landscape where margins are tight and market volatility is the norm, the “rearview mirror” approach to farm accounting is no longer enough. On a recent episode of the Top Producer Podcast, Shay Foulk of Ag View Solutions sat down with Paul Neiffer to discuss how artificial intelligence and new software integrations are fundamentally changing what it means to manage a farm business.

The message is resonating. According to a recent announcement from the company, the newly launched Farm Profit Manager platform surpassed one million acres enrolled by producers in just 10 days—reaching 500 users across 23 states.

This milestone highlights a major shift in the industry: a move away from manual data entry and toward real-time management powered by AI. Here is what this digital evolution means for your operation.

Real-Time Decisions, Not Just Tax Records

Historically, farm financial tools were often just a place to store numbers for the end of the year. Foulk argues that the next generation of software is designed to help you make decisions today, not just analyze what happened last year.

“The tool will tell you numbers, you can get the numbers right seven ways to Sunday, but what matters is the decisions that you make out of it,” Foulk says. By moving away from rigid Excel spreadsheets to AI-driven platforms, farmers gain clear visibility into their true cost per acre and per unit.

Featuring 20 reporting tools, Farm Profit Manager generates your farm:

cash flow
balance sheet
lender report
and more

“These are things that farms would spend days doing or they just wouldn’t do, frankly,” Foulk says.

Breaking Down Barriers: The “No-Frills” Free Model

To ensure producers can control their numbers without expensive barriers, Ag View Solutions has made the core Farm Profit Manager platform available at no cost.

“Farmers have been asking for exactly this—a trusted, no-frills tool that doesn’t lock them into expensive subscriptions,” says Foulk. “In ten short days we have seen overwhelming confirmation that producers want control of their numbers without barriers.”

To save time on clerical work, the software offers optional paid integrations to automate the “meat and potatoes” of data entry via:

John Deere Ops Center (Machinery and field data)
QuickBooks Online (Financial records)
Plaid (Banking and transaction data)

Strengthening the Advisory Team

Lenders and market advisors famously dislike surprises. The ability to share specific, permitted data points instantly changes the dynamic of the advisory relationship.

“Think of the power that that can have to improve that relationship [with lenders],” Foulk points out. The platform is designed to help farmers connect their entire advisory team—from bankers to marketing advisors—to the same real-time data, enabling better-informed decisions for the business.

Building a “Virtual Board of Directors”

Perhaps the most innovative application is the use of AI agents to act as a sounding board. By uploading farm data into secure models, farmers can create specialized “agents” to provide feedback on HR, marketing, or CFO-level decisions.

“AI is kind of the next step in that progression in my opinion,” Foulk says. “It’s here. And you’re either using it or you’re not. Do you want to take your horse to school or do you want to drive an automobile? That’s where we’re at with AI.”

How to Get Started with AI

You don’t need a degree in computer science to begin using these tools. According to Foulk, the best way to stay competitive is simply to start experimenting.

“Stop Googling things is my recommendation,” Foulk advises. “Get into one of the tools—free version, 20 bucks a month, 100 bucks a month, I mean, whatever it is. Learn how they operate, learn how they can benefit your business.”

What’s on the Horizon?

The rapid adoption of Farm Profit Manager is just the start. The platform plans to expand internationally into Europe, Australia, and South America, with a livestock-focused version slated for release by 2027. An Enterprise version for agribusinesses is also in development to help firms support their producer clients directly.

Inside The Tax Return of Your Farm's Future

Thu, 09 Apr 2026 12:59:16 GMT

The traditional process of preparing agricultural tax returns has long been defined by manual data entry and the complex reconciliation of income. However, the integration of artificial intelligence into financial systems is ushering in a more sophisticated era of tax management. For the modern farm, the future of filing lies in a seamless pipeline where software handles the heavy lifting of data organization, leaving the high-level strategy to human experts.

Comprehensive Data Integration

The foundation of a modern tax return is the accounting system. Platforms like QuickBooks, Xero or specialized farm management software are becoming increasingly autonomous. In the near future, these AI agents will do more than simply record expenses; they will analyze them in real-time.

With direct links to bank feeds and digital invoices, AI can categorize expenditures with precision. It can distinguish between capital investments, such as machinery or land improvements, and standard operating costs like seed and fuel. This continuous synchronization means by the end of the fiscal year, the financial records are already in a format that mirrors the requirements of a tax return.

Automated Document Reconciliation

A significant portion of tax preparation involves matching — ensuring the farm’s internal records align with the documents issued by third parties. A preparer of a farm tax return may spend more time making sure all of the income is in the right box then planning to optimize the income tax level.

AI is uniquely suited to handle this high-volume verification. The system can automatically ingest Form 1099-PATR (cooperative distributions), 1099-G (government subsidies) and other Form 1099s and W-2s and verify them against recorded deposits.

If a document is missing or a figure does not match the ledger, AI identifies the specific discrepancy immediately, allowing for a targeted correction rather than a manual search through months of records.

The Role of Human Oversight

While AI provides the technical framework for the return, the final stage remains firmly in human hands. Once the software has mapped the data to the appropriate tax schedules, it produces a comprehensive draft for professional review.

This allows the farmer or a tax consultant to transition from a data entry role to a strategic advisory role. Instead of spending hours verifying line items, the human reviewer can focus on critical tax planning decisions including accelerated depreciation choices or income averaging that require professional judgment and an understanding of the farm’s long-term goals.

The result is a more accurate, defensible and efficient tax filing process. By automating the clerical aspects of the return, AI allows agricultural producers to maintain focus on their operations while ensuring full compliance with the evolving tax laws.

Feeling the Price Pinch: Young Adults are Eating Out Less

Wed, 19 Nov 2025 21:39:53 GMT

Rising costs are making life feel tighter for many Americans. Inflation, higher food prices and growing debt burdens have all eaten into budgets, and young adults especially are feeling the squeeze. To stretch their dollars, many in this age group are cutting back on dining out.

A recent report from Ever.Ag, published by the International Dairy Foods Association, shows that when young adults do spend money at restaurants, they are looking for ways to save. They split appetizers, order from kids menus, choose lower cost items, skip premium add-ons or avoid the meal entirely. And major restaurant chains like McDonald’s and Chipotle are seeing the effects.

Customers aged 25 to 35 once made up roughly a quarter of Chipotle’s sales, but traffic from this group has fallen for three straight quarters, including a 0.8% decline in the third quarter, according to Scott Boatwright, CEO of Chipotle.

“We believe that this trend is not unique to Chipotle and is occurring across all restaurants as well as many discretionary categories,” Boatwright says. “We’re losing them to grocery [store] and food at home. They feel the pinch, and we feel the pullback from them as well.”

Is McDonalds too Expensive?
Many consumers are also wondering if McDonald’s has priced itself out of the affordable category. The Times reports that a Big Mac sold for $2.24 in 2000 now averages $6. Adjusted for inflation, it should cost about $4.22, which means today’s price is roughly 40% higher than its inflation adjusted equivalent.

Other menu staples have climbed just as sharply. FinanceBuzz found that the price of a Quarter Pounder with Cheese meal more than doubled between 2014 and 2024. And a 10-piece McNuggets meal rose from $7.19 in 2019 to $9.19 in 2024.

The Times notes McDonald’s is not the only offender. The same FinanceBuzz study found that Popeyes prices have climbed an average of 86% and Taco Bell’s about 81% over the past decade, with Chipotle close behind, up about 75%. Wendy’s briefly held the title of most expensive major fast-food chain in 2022, with the average menu item at $6.63 after a 35% jump in just over a year.

Job Market Pressures
Labor market challenges in this age category are adding to the strain.

A recent PYMNTS Intelligence report shows an increase in joblessness among young adults and notes wage gains for workers ages 25 to 29 are currently among the weakest since 2011. Bloomberg reports recent college graduates are struggling to find entry level work in what executives describe as a low hire labor market.

This financial pressure is showing up in spending patterns. PYMNTS Intelligence notes the share of Gen Z consumers living paycheck to paycheck jumped from 57% in January 2023 to 69% in January 2025, a higher share than the general population. Another PYMNTS analysis found that purchases by 18-to-24-year-olds dropped 13% year over year as student loan repayments resumed and credit card delinquencies increased.

Eating Out No Longer ‘Worth It’
For many young adults, eating out has become a luxury rather than a routine. Rising menu prices, coupled with stagnant wages and a tougher job market, are forcing this group to rethink small everyday purchases. What used to be an easy stop for a quick meal now feels like a splurge, and at-home meals often come out ahead.

These financial pressures are reshaping spending habits in a big way. Younger consumers are not choosing new restaurants; they are choosing to skip eating out altogether, and until their budgets have more breathing room, home-cooked meals are set to rise as the more affordable option.

How to Get a Loan Approval: A Banker's Point of View

Tue, 18 Nov 2025 20:28:26 GMT

For most farmers, the next big project on the operation starts with a conversation with your banke, and being fully prepared before you walk into that meeting can significantly increase your chances of getting a loan approval.

Curtis Gerrits, senior lending specialist at Compeer Financial, has spent years helping producers get the financing they need. During a recent Professional Dairy Producers webinar, he shares what truly makes a loan application stand out and how farmers can set themselves up for a smoother approval process.

Get Your Financial House in Order
When preparing for a loan, Gerrits emphasizes lenders look first at clear and complete financial documentation. The process begins with the fundamentals.

“Some of the documents that are top of mind are your profit and loss statement,” he says. “Don’t just stick with the current year. Try to have access to the last three years.”

A profit and loss statement not only establishes whether a business is profitable but also helps lenders understand how the farm manages revenue and expenses over time. Gerrits encourages farmers to follow this with a current balance sheet that breaks down assets and liabilities in detail.

This balance sheet should include livestock numbers, acres owned and leased and a complete equipment list with updated values. Together, these documents paint a picture of financial health and management discipline.

For long-term planning, Gerrits stresses the importance of forward-looking projections.

“Probably one of the last things is to have a detailed projection,” he adds. “What is the business plan, and how is this going to impact your business?”

These projections help both the producer and the lender understand how an expansion, land purchase or capital improvement will affect cash flow and operational stability in the years ahead.

Details Matter
Gerrits says one of the most common pitfalls he sees is overlooking the finer points of financial reporting. Accurate and transparent records build trust and demonstrate professionalism, giving lenders greater confidence in the producer’s decision-making capacity.

“The attention to detail is probably a key thing that maybe gets overlooked from time to time,” he explains.

A lender needs to see exactly what makes up the operation’s income. This could include crop sales, livestock sales, custom work, direct-to-consumer revenue or any other streams that support the business. Clear categorization helps verify performance and gives lenders a better understanding of how the farm is managed.

Build a Strong Relationship
Beyond the numbers, Gerrits stresses the importance of working with a lender who understands the realities of farming. A loan officer familiar with agriculture can better interpret financial statements, spot trends and anticipate challenges.

“Working with a loan officer that understands your day-to-day is really important,” he says. “Having that good relationship where you can bounce ideas off of one another is a really great thing.

Gerrits also encourages producers to bring their lender onto the farm. Sometimes a walk-through can communicate more than a financial packet ever could.

“Put your boots on and take a walk through the barns and show them what you are doing and why the loan application that you are requesting is important,” he says.

Seeing the animals, the facilities and the workflow helps lenders fully understand the operation’s strengths and opportunities, and it gives them greater clarity when evaluating a loan request.

Be Honest About Tough Years
Producers should not shy away from acknowledging difficult financial periods or reporting losses on taxes. Gerrits reassures farmers that losses do not automatically disqualify them from financing.

“Do not get too hung up on the losses out there,” he explains.

A balance sheet can often show how those losses are supported or offset by strong assets, such as land, livestock or equipment equity. What matters most is transparency and context. And demonstrating that you have a plan to manage challenges and leverage your assets can build confidence with your lender.

Plan for the Future
Constant communication with your loan officer can make a big difference in the approval process. Gerrits says checking in periodically, even with a quick touch base, helps avoid surprises.

“Maybe you’ve already talked about: ‘Hey, in a couple of months we might have something come in, and I’m going to have a request for an operating line of credit,’” he says. “That way it’s already in the back of the loan officer’s mind, and they can start preparing or gathering the right information.”

A little preparation can also greatly speed up the loan process. Gerrits recommends giving your loan officer about one month of lead time before funds are needed, along with complete financial documents.

“At the end of the year, we’ll see some borrowers who need to borrow money to do some prepaids to help their tax situation,” he says. “It’s hard to turn things around because a lot of folks are coming in at the last hour. If you give them a month’s lead time with all of the information pertinent, all the financials and balance sheets, that will just help expedite it.”

Looking further ahead, Gerrits encourages producers to think generationally and begin planning for succession well before retirement becomes imminent.

“It is never too early to start a succession plan,” he says.

Early planning gives the next generation clarity about future roles and expectations, helping them prepare financially and personally for the responsibilities that lie ahead.

Own Your Numbers
Ultimately, Gerrits believes successful borrowers take responsibility for knowing and understanding every aspect of their financial position.

“Know your numbers first,” he says. “Don’t just rely on your loan officer to tell you how you are doing.”

Throughout the loan process, preparation and transparency go a long way. Clear financials, attention to detail and regular communication help your lender understand your goals, while on-farm conversations and honest discussions build trust. Being organized, consistent and informed does more than streamline an application, it helps you make better decisions, catch issues early and keep the operation moving in the right direction.

A Guide to Producing Your 2026 Costs

Tue, 07 Oct 2025 13:33:40 GMT

While the challenges have stacked up this year, it’s time to start thinking about producing your 2026 costs. Prepay season is here, and we’re looking at some decent marketing opportunities for the year ahead.

The term “cost of production” seems a bit disconnected at times because, in reality, we choose our costs. Sometimes, we forget this. We feel that things are out of our control — land, equipment, inputs, etc. This simply isn’t true. You get to make the decision on what you spend, when and where. If you’re having a visceral reaction to this fact, I suggest you take some time to consider whether this is the truth (it is).

Look at what some of the best farm operations we get to work with do:

• Don’t get over your skis on land costs. If it makes sense from a contribution margin, then go for it. If it is paying high cash rent or unfavorable lease arrangements just to cover more acres, it isn’t worth it.

• Keep your fertility in check. This means not skimping when you need to apply and spreading fertilizer strategically when you can afford to not broadcast straight rate on every acre. I told my agronomist my budget by crop acre this year, and he adjusted phosphorous and potassium applications to get the most yield bang for our buck. I produced my cost.

• Keep the return to management costs in line. You get to decide if you get a new vehicle, take a trip or pay for college. It is easier said than done, but we need to take personal responsibility.

• Yield is the No. 1 way to reduce your cost of production — bar none. Is the market asking for more corn? Not overall, but you also need it to maintain profitability. Commodity markets weed out inefficiency, and the system needs you to produce more or market better to stay viable.

Use the focus areas above to dial in and produce your costs for the crop year ahead.

Does this feel a bit harsh? I’ll commiserate for a while. If you have tried to stay the low-cost producer, and your market and conditions have driven you to exasperation or additional income sources or mental pressure, you need to evaluate where you’re at. If you hate what you’re doing, stop doing it. However, you should also recognize we are likely at the bottom of a cycle. These things come and go, and I do believe in better days ahead. I was always told to never quit on a bad day. Be financially responsible and accountable to your spouse, children, lenders and business partners, but if you can afford to work through this, there will be opportunities ahead. If you need someone to talk to or just to vent, I’m a phone call away.

Are Large ARC/PLC Payments Coming?

Mon, 06 Oct 2025 13:08:38 GMT

The One Big Beautiful Bill Act increased the statutory reference price and also made some enhanced changes to the effective reference price (EFR).

The EFR is used to calculate payments under Price Loss Coverage (PLC) and also affects the benchmark price used in the Agricultural Risk Coverage (ARC) calculations.

Instead of using 85% of the Olympic Average of the previous five years of MYA prices, the new calculation uses 88%, which effectively increases the EFR for many commodities. The old cap of 115% of the statutory reference price remains. However, with a larger increase in statutory reference prices, all commodities have seen an increase in the EFR that will be used to make either PLC or ARC payments. The increase can be substantial.

What This Means For Farmers
About 70 million base acres were enrolled in PLC for 2025 and about 172 million acres for ARC. There were around another 30 million base acres not enrolled due to ineligible crops or the farmers electing to not participate.

Many farmers were concerned the changes to ARC and PLC would penalize them if they made the wrong election for 2025. Congress understood this dilemma and added a provision to automatically pay the higher of ARC or PLC — but only for the 2025 crop year.

Another issue for many farmers has to do with the payment limit. If there was no increase, then many farmers would not get any extra payments. So, Congress fixed this partially by:

• Increasing the payment limit to $155,000 (indexed to inflation starting with the 2026 crop)

• Allowing LLCs and S corporations to have multiple payments similar to what general partnerships can do

If the projected MYA prices as of late-August hold, then minimum estimated payments for the major crops for next October would be:

• Corn – $5.7 billion

• Wheat – $2.25 billion

• Cotton – $1.3 billion

• Soybeans – $1.1 billion

• Rice – $871 million

• Total Crops – $12.5 billion (up from $5.60 billion under the old rules)

Because many areas could see higher ARC payments than PLC, final payments might be higher. These payments reflect the payment based on 85% of base acres but do not reflect farmers with payment limits.

The bottom line is farmers will receive more payments under the changes, and the increase could be significant.

Unlock Financial Success: Working with Your Ag Lender

Wed, 10 Sep 2025 14:50:10 GMT

The latest USDA farm cash receipts forecast has corn, soybean and wheat prices driving a 2.5% decrease for 2025 crop receipts compared to 2024, and the agency’s forecast shows an 11.2% increase for total animal/animal product receipts. Pair that with production expense increases calculated at 2.6% for crops and 21.5% for livestock. Farmers are financially pinched.

“Good decision-making, good risk management are always differentiators in any market, but they’re especially true today,” says Jase Wagner, president and CEO of Compeer Financial.

This fall into the winter, farmers will meet with their lenders to discuss operating loans, cash flow and capital expenditures. And the risks feel higher than ever. While greater transparency may reveal vulnerabilities in the business, it is the No. 1 thing lenders say will help them get farmers through what could be a very tough series of years.
“Really be open and honest with your lender,” Wagner says. “Being honest with yourself about where you are and what your abilities to execute over the next couple years will be really important as things get tighter.”

To prepare yourself for working with your ag lender, Kelly Hardy and Jim Halvorsen, with CLA, share these tips from the accountancy perspective:

1. Build a team of outsiders that work together. That should include:

Banker
Accountant
Attorney
Grain Buyer
Marketing Advisor
Crop Insurance Agent
Mentors
Successors

2. Be proactive in who you work with.

“Work with lenders who understand farming,” Halvorsen says. “You should expect to give them information about [the] farm, answer their questions and have them understand your goals.”

As for how often to meet with your lender, Halvorsen says it’s a best practice to meet with your financial partners once a quarter.

3. Know the type of information needed to make the best decisions for your business.

“If your banker only wants your tax return, it’s a red light,” Hardy says. “You need to provide a financial statement.”

She says tax returns are not a measure of the business’s profitability or assets.
“Tax returns don’t say how much grain you have in the bin,” she says.

Also, she advocates for the financial discussions to be centered on investments in the business — not taxes.

4. Transparency is the quickest way to establish a long-term, successful strategy despite any short-term challenges.

“No lender wants to take your farm. They are there to help you,” Hardy says.

She says having honest discussions with the full set of information is what reveals opportunities, even if the discussions may show weakness in the current business.
With lower commodity prices, Hardy says the drop in income will be evident on balance sheets this year. Having a true state of the business discussion will also unveil a strategy for how to manage the current farm economy.

The Best Time to Start Your Retirement Plan

Fri, 06 Jun 2025 21:00:31 GMT

Farmers historically have struggled to invest money in anything other than their farm operation. However, by investing in retirement plans including an IRA, a farmer can more easily save up for retirement and make the transfer to the next generation much easier.

The power of compounding is the financial seventh wonder of the world. Based on your annual investment return, you can determine how quickly your investment will double by dividing it into 72. For example, if you average 3% on your money, it will take 24 years to double. However, if you can earn 8%, then it only takes nine years.

The younger you start to invest, even small sums, the more money you will have at retirement. Let’s compare the results of placing $10,000 into a retirement account at either age 20 or 40.

The farmer who does this at age 40 and then pulls the money out at age 70 will have $100,627. However, the farmer who starts at age 20 will have $469,016, and if they can earn 10%, will have $1,173,909.

The cost of maintaining a solo 401k plan is very inexpensive and married couples can set aside at least $14,000 into an IRA each year. The fees on those accounts are minimal and you can make sure to invest in low-cost ETFs or mutual funds. High-cost funds could quickly reduce your returns substantially.

Most of the earnings will result in the last 10 years, so the sooner you get started, the more funds you will accumulate.

Risk Protection Benefits
There’s another big reason to make this investment. Funds in a retirement plan are fully exempt from bankruptcy, and we all know farming can be a very risky business. The full exemption does not apply to IRAs, but the amount that is exempt is fairly large.

This amount gets updated every three years. On April 1, 2025, the exemption amount was raised from $1,512,350 to $1,711.975 through March 31, 2028.

Most farmers have IRAs less than this amount, so it’s likely they will have a full exclusion if bankruptcy was to occur. Amounts rolled over from a 401k plan or other retirement account, including earnings associated on that account, are fully exempt.

In some states, IRAs are fully exempt or at least partially exempt.

The bottom line is to invest in an IRA or retirement plan. I hope you never need the protection, but it is a good insurance policy.

Peel Back The Curtain: Boosting Farm Efficiency With Business Tech

Tue, 15 Apr 2025 20:05:50 GMT

While relationships remain the foundation of the farmer business ecosystem, technology is brining a new structure to how everyday business is done.

“You have to have the relationship, maybe to start, but if it is inconvenient, you will lose business,” says Jake Jorandstaad co-founder of Bushel. “If you still only send paper invoices in the mail, and you don’t accept an online payment, you’re in trouble. You’re literally making it inconvenient for the 35-year-old who’s about to be your biggest customer in the next ten years to do business with you.”

Joranstaad highlights this as a takeaway from the latest State of Farm Report published by Bushel. Started in 2018, the goal of the survey is to answer questions about farmer tech adoption, which provides takeaways not only for technology but also payments and business operations.

This year’s findings are from over 1,300 respondents, and of which 59% of respondents farm more than 500 acres.

To support the importance of ease of doing business, the study found more are shifting to digital options. Only 39% of farmers prefer submitting grain offers in person, and 34% prefer ordering inputs face-to-face.

“Five years ago it was like most farmers didn’t really use software in the farm in their mind,” he says. Now, per Bushel’s survey, on average a farmer uses three software programs in their farm business.

In each year, the younger demographic shows a stronger use of technology in general. Joranstaad says with successful adoption over time, the demographics are shifting.

“50 is the new 40. 50 is the age range that tips the scale. If you’re 50 or younger, you are very much interested in adoption of technology on your operation. There’s very little resistance anymore in that range. And of course, more and more of those folks are also running the operations,” he says.

This underscores the need for businesses who serve farmers to outfit their operations for the future.

For example, 61% of farmers under 40 prefer mobile apps for payments and fund transfers.

And record-keeping has seen a jump in digitization: in two years, the use of pen and paper dropped from 65% to 21%. From the 2025 survey, spreadsheets are used by 39% of respondents—in 2024 it was 61%.

(Bushel)

One of the next leap frog’s in tech use will be software and apps for decision making beyond just simple record keeping.

Per this report, farmers under the age of 50 value software to help with improved decision making at a higher rate. And with the data spliced by size of operation, one-third of farms more than 10,000 acres use software for improved decision making.

The trends in the State of the Farm Report have been used by Bushel with production introductions, such as Bushel Wallet.

“We expected the farmer to want to start doing business with their farm operation, like they can at home,” Joranstaad says, referring to Venmo and Paypal services. “Now our report shows the 40 year olds and under expect to be able to use technology and tools to do payments and handle their business. Even though 80% of people get paper checks, but the preference to get paper checks is less than half. And so we’ve got to work on that as an industry.”

He says in the past 18 months, Bushel has seen a growth in farmers enrolling for direct deposit online. Earlier this year, the company added a feature to Bushel Wallet where the online account can earn interest—right now around 3%.

“It’s been one of the things we were working on–how can we make a compelling place for your money to initially get it quickly so you can manage it, move it to your different banks, and now earn almost 3.5% interest,” Joranstaad says.

Other takeaways:

Farmer payments: Among farmers under 50, a 30% gap exists between how they are paid and how they prefer to be paid when it comes to paper checks.
Purchasing trends: 70% of farmers cite using a credit card at least one time per month; yet only 8% of farmers prefer the use of a credit card. 49% of respondents said that their ag retailers had some sort of policy regarding using credit cards. 40% of respondents say retailers are passing those fees onto the farmers to help recoup those costs.
Financial management: 32% are currently using apps or digital tools from their bank for financial management for their farm.
Digital payments: Up to 53% of respondents use Venmo and up to 46% use PayPal, which provide baseline experiences with digital payment processors for sending or receiving money.
Ordering inputs: 34% of respondents think the process of ordering inputs via their ag retailer could be improved—with the top examples being price information, easier access to quotes, and input comparison tools.

$10 Billion in ECAP Aid Now Available to Qualifying Farmers

Fri, 28 Mar 2025 19:33:12 GMT

Applications are now open through August 15, 2025, for farmers interested in participating in the $10-billion Emergency Commodity Assistance Program (ECAP), which is being administered by USDA’s Farm Service Agency (FSA).

The aid comes available at a crucial time as farmers are experiencing low commodity prices, high input costs and a variety of trade uncertainties going into the 2025 production season.

The American Relief Act of 2025, which was passed by Congress late last year, authorized the $10 billion for ECAP payments to help offset losses growers incurred during the 2024 crop year.

Payments will be made to farmers on a flat per-acre rate on 100% of planted acres, or 50% of those prevented from planting, Paul Neiffer, Farm CPA, told AgriTalk Host Chip Flory earlier this week.

“Eligible farmers are those planting commodity crops like corn, soybeans, wheat, legumes, dry peas, oilseeds,” Neiffer said.

Acres planted for harvest, grazing, haying, silage or other similar purposes in the 2024 crop year also qualify. In all, a total of 22 different crops are included in the program (see list below).

Neiffer addresses many of the questions farmers are asking him about ECAP in his discussion with Flory on AgriTalk. Listen here:

Specific Requirements For Eligibility
To be eligible, farmers must meet the following requirements, according to Betty Resnick, American Farm Bureau Federation economist:

Be actively engaged in farming.
Have an interest in input expenses for a covered commodity.
Have reported acreage of eligible commodities to FSA for the 2024 crop year planted and prevent plant acres to FSA on an FSA-578, Report of Acreage form.
Have reported acres that were prevented from being planted to FSA for the 2024 crop year on an CCC-576 Notice of Loss form (if applicable).

Producers who have not previously reported 2024 crop year acreage or filed a notice of loss for prevent plant crops, must submit an acreage report by the August 15, 2025 deadline.

Notably, the initial round of payments will only amount to 85% of the per-acre payment to ensure that enough funding is available for all farmers who sign up for the program, Neiffer told Flory.

After the ECAP application period closes on August 15, a second payment may be issued with the remaining funds up to the additional 15% of the per-acre payments. Farmers can estimate their total expected payments using an online calculator available at fsa.usda.gov/ecap.

Producers can also contact their local FSA offices with additional questions.

Farmers can use the ECAP calculator provided by USDA-FSA to get an idea of what their payment could be potentially.

(Lori Hays)

Eligible Crops And Rates
Commodities included in the program are:

Wheat: $30.69
Corn: $42.91
Sorghum – $42.52
Barley – $21.67
Oats – $77.66
Upland cotton & Extra-long staple cotton – $84.74
Long & medium grain rice – $76.94
Peanuts – $75.51
Soybeans – $29.76
Dry peas – $16.02
Lentils – $19.30
Small Chickpeas – $31.45
Large Chickpeas – $24.02

Eligible Oilseeds:

Canola – $31.83
Crambe – $19.08
Flax – $20.97
Mustard – $11.36
Rapeseed – $23.63
Safflower – $26.32
Sesame – $16.83
Sunflower – $27.23

Your next read: What USDA Corn and Soybean Acreage Estimates Would Shock the Market On Monday?

How Your Income Taxes Will Change This Year

Mon, 24 Mar 2025 17:41:02 GMT

The Trump tax cuts, officially known as the Tax Cuts and Jobs Act (TCJA) of 2017, have been a topic of significant debate since their inception. It appears the Republicans might have enough political capital to both extend the TCJA and enact additional tax cuts that could help farmers.

The major tax cuts that have helped farmers since 2017 include (but not limited to):

Reduction in most tax rates
100% bonus depreciation through 2022
Section 199A 20% net deduction on farm income
Doubling the estate tax exemption (currently $13.99 million)
Increasing the child tax credit to $2,000

However, there were also some provisions that penalized many farmers:

Limiting the state and local tax (SALT) deduction to $10,000
Eliminating the tax-free treatment of equipment trades
Reducing 100% bonus depreciation (there will be none starting in 2027)
Dropping the corporate tax rate to 21% (most farmers paid 15%, so this was a 40% tax increase)

The House Republicans passed a budget bill to allow income taxes to rise by $4.5 trillion over 10 years. The Senate is proposing to ignore the budget effect of making the Trump tax cuts permanent, and the House could go along with this proposal.

This effectively allows Congress to make the Trump tax cuts permanent and allows for an additional $4.5 trillion of reduced taxes in other areas such as:

Eliminating taxes on tip income
Eliminating taxes on social security income
Eliminating taxes on overtime
Eliminating estate taxes
Reducing the corporate income tax rate to 15% for domestic production

However, there are many provisions of the Trump tax cuts that some Republicans are not in favor of, such as the $10,000 cap on the SALT deduction. Eliminating this cap would cost about a trillion over 10 years. Most republicans are also not in favor of the Inflation Reduction Act “green” provisions and many of them will be repealed or reduced, that could include the Section 45Z fuel tax credit.

The bottom line is income tax law will change this year, and it will be dramatic. Our crystal ball right now is fairly cloudy as to the final provisions, but for most farmers the changes will likely be beneficial.

Traction Ag Partnership Into Ag Retail Showcases ‘Next Generation of Farm Accounting’

Tue, 11 Mar 2025 01:15:52 GMT

For the past five years, the team at Traction Ag has been working to put all of a farmer’s accounting records in one place as easily as possible. And this past week, they unveiled the next level of achieving that goal via a partnership with Growmark’s FS member companies to enable seamless synchronization of FS bills directly into Traction Ag’s cloud-based platform.

The integration with FS and its ag retail businesses brings three key benefits, according to Brian Stark, co-founder of Traction Ag:

Simplifying billing with automation
Reducing errors or miskeys in data input
Saving time

“No one really likes the manual process of accounting, but accuracy in business is important,” Stark says. “At the same time, we can save farmers time so bills don’t pile up and everything is accurately accounted for.”

He shares an example of a manual bill process that may take three minutes or more for every bill, however with the new Traction Ag functionality, the same bill took less than a minute to enter.

“We are using cutting-edge technology in farm accounting, and it also makes our partners easier to do business with,” he says. “Farmers can avoid the paperwork nightmare and focus on farming—the time savings is super important.”

Traction Ag’s cloud-based accounting software also has APIs with John Deere Operations and Climate Field View. Stark says it’s unique offering is being focus on agriculture and providing for breakeven per bushel, field level profitability, inventory management and more.

“Our new integration with FS shows how we can also bring in the retail inputs and agronomy side of the farm business, and now we have a foundation layout so we can continue to work with other retail partners and make accounting easier for farmers and everyone they do business with,” Stark says.

Bushel Adds Four Financial Tools, Including Interest Bearing Accounts

Thu, 27 Feb 2025 15:37:08 GMT

Financial tech company Bushel has announced updates coming this spring to its payments platform, which includes added features for both farmers and ag retailers/agribusinesses.

With the goal to provide an all-in-one platform to manage farm operations and finance, Bushel Farm will include a digital wallet.

Four additional financial tools include:

1. Interest-bearing business account: competitive interest rates currently 3.43% as of Feb 26, 2025 and will be eligible to be FDIC-insured up to $5 million through sweep program banks. Farmers and agribusinesses will gain access to a Bushel business account*, offered by The Bancorp Bank, N.A. Member FDIC, a wholly owned subsidiary of The Bancorp, Inc.

“When you consider the whole package, this continues to strengthen the business relationships between farmers and agribusinesses. When a farmer can immediately begin earning interest on their grain settlement, that’s meaningful to the bottom line. When a retailer can collect payments online with lower fees and ensure on-time payment, that is meaningful to the bottom line,” said Jake Joraanstad, CEO of Bushel.
For grain elevators and ag retailers, Bushel’s updates provide a strategic to generate returns on operational float. The business account offered by The Bancorp, provides for businesses to keep funds in the account, earn competitive interest, and maintain liquidity for daily operations.

2. Send and request payments directly on the platform to help streamline transactions.

3. Access and Repay Lines of Credit: Users can manage lines of credit within Bushel Farm

4. Additional features in 2025: which includes high-limit mobile check deposits for grain settlement checks, online bill pay, and debit card access.

Bushel emphasizes how this handful of new features continues its progress to remove physical payments via check which rely on U.S. mail and its inherent security risks with check fraud. Bushel’s State of the Farm Report shows a 12% decrease in farmer usage of paper checks for business payments.

The company highlights existing features of Bushel Farm, including field-level rainfall data, activity tracking, profit and loss reporting, and more, will continue to be available.

Boost Your Current Farm Accounting Software With This Tech

Wed, 26 Feb 2025 19:04:53 GMT

New Zealand-based ag tech company Figured wants to build upon your current farm accounting software to help you make real-time decisions.

“We want to bring the production data and information, like livestock being sold or bushels being harvested, and marry it with the financial information you already already have,” says Mitchell Parks, Figured U.S. account executive. “It creates color and insight into what’s happening on the farm so that you can make those smarter financial business decisions.”

During an episode of the Top Producer podcast, Parks and his colleague Erin Arick joined host Paul Neiffer to share how farmers can get an enhanced look at their finances through the Figured software.

Neiffer uses this analogy to describe the technology.

“With accounting software, like Xero or Quickbooks, you’re looking in the rearview mirror at historical data. Figured is designed to allow you to look through the windshield, so to speak. You’re able to use it as a management tool,” he explains.

Some of the ways you can use the software as a management tool include:

To create farm budgets
To calculate break-evens and profitability
To model long-term “what if” scenarios using different options

“You’re going to be looking at all the transactions that come through the accounting platform, and you can create profit centers to bucket those transactions where they happened on the farm. So, you can track profitability for different aspects,” Arick says.

It’s important to note Figured must be used with Quickbooks Online, not the desktop version. Other integrations are likely on the horizon as well.

“We are exploring integrations with a couple of the major producer tracking tools,” Parks says. “I’m sure we’ve all had instances where there’s been a spreadsheet with a bit of data written, and then we’ve emailed it across a couple of people, and by the time it’s come back to you, it’s not the same spreadsheet. How can we remove that from the equation? I think we can do that really well and know that we can trust that data and trust that everyone is on the same page when it comes to those financials.”

If you want to test out Figured without adding all of your farm information, the company has a U.S. demo farm that can be accessed on its website using a free login.

“It’s like a sandbox,” Arick says. “You can mess around in there to see what the outputs are and create trackers. It’s just not connected to a live QuickBooks Online file, but if you would wish to do that, you can create a trial and connect it to your QuickBooks Online or Xero file.”

Catch up on episodes of the Top Producer podcast

This is the Year to Re-Evaluate Your Crop Insurance

Mon, 10 Feb 2025 20:17:49 GMT

According to Cole Patrick, director of insurance strategies at Compeer Financial, farmers need to take a serious look at their crop insurance strategies before the 2025 deadline because last year’s coverage isn’t going to cut it.

“This is not a “set it and forget it” year - it’s not the year to renew without considering changes to your coverage options,” Patrick explained during a Compeer Financial webinar in January. “Last year’s coverage might not be adequate for the cost of production, and coverage might not have the same effect it did last year or even two years ago.”

Patrick provides this example:

In 2023, 75% revenue protection (RP) with 230 average production history (APH) and a $5.91 corn price equaled $1,019 in liability.
In 2024, using a corn price of $4.66, that came to $804 in liability.
In 2025, using a corn price of $4.40, that only supplies $760 in liability.

Data from Farmdoc at the University of Illinois estimates total expenses for a farmer in northern Illinois would average about $1,000 per acre - making it important for liability to come closer to 2023 numbers.

“Many don’t want to increase costs by increasing coverage, but they also maybe can’t afford to leave hundreds of dollars at risk,” says Brandon Pezanoski, state insurance product officer with Compeer Financial. “There are a couple of different routes to get this number closer to $1,000 an acre of coverage.”

Look Beyond Base Coverage
Expanding on base coverage, there are two sets of options.

Title 1 through FSA: Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC)
Stacked: Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO)

Patrick shares four main differences for farmers to consider:

ARC/PLC cover base acres, while SCO/ECO are planted acres.
ARC/PLC have no premium.
ARC/PLC pay in Oct. 2026, and SCO/ECO pay in June 2026.
ARC and SCO cannot be combined, but a combination of SCO and/or ECO can be added to PLC.

“In the past few years, we’ve largely seen preference toward ARC - which is typically more favorable when you have a few years of high prices in that 5-year Olympic average. Because PLC uses a statutory reference price, that hasn’t been as attractive,” Patrick says.

When To Use ECO
In 2025, he expects ECO to gain in popularity.

“We think this is going to be hugely advantageous for producers out there,” Patrick says. “It’s a very effective shallow loss coverage tool.”

ECO is an optional, area-based policy endorsement with a coverage band that goes from 85% to 95%. It is available regardless of your ARC or PLC election and can be purchased with or without SCO. However, it does need to be purchased at the same time as your underlying multi-peril crop insurance (MCPI).

“Most of the products we have that are 95% coverage are private product, not subsidized and simply cost a 2:1 or 3:1 ratio,” Pezanoski says. “Here we’re looking at a 5:1 ratio, and there’s no ARC conflict.”

Patrick adds that if crop insurance prices fall more than 5% between the spring and the fall, you’re in ECO territory.

“In the last 10 years for corn, that price has dropped from the spring to the fall price seven times, and six out of those seven times it was greater than 5%,” he says. “If I’m just playing my odds, and I think the price is going to drop more than 5% between 60% to 70% of the time, those are pretty good odds.”

Your Next Read: ARC or PLC? Enrollment is Now Open and Coverage Levels Could Hit Near All-Time Highs For Some Crops

How To Budget For Your Farm's Transition

Tue, 28 Jan 2025 13:00:00 GMT

In 2023, I said the most important thing for your farm business is build your transition plan. Recently, we’ve focused on knowing your numbers, and now it’s time for cost of living and budgeting for retirement.

When I work on transition planning with family farms and businesses, I often start by asking whether or not the senior or junior partners have met with a certified financial planner. Usually, but not always, the answer is no. But almost every time, the senior partner needs a clearer picture of their needs in the next chapter of transition or retirement. They think they will be OK, but until it is put on paper, there is still this massive fear about the unknown. Thankfully, it’s easy to navigate.

Anticipate Your Lifestyle
The first step is understanding what your cost of living looks like in retirement. Yes, this means budgeting and anticipating expenses.

I put together a one-page, farm-centric worksheet so you can easily calculate your budgetary outlook. This includes expenses such as healthcare, vacation, groceries, basic needs, and even that new fishing boat you want to buy. I don’t care what your budget is, but you should. You need to have an excellent idea of what that number is. In fact, it is one of the most respectful things you can take the time to calculate for you, your spouse and your transitioning partner.

Put It On Paper
The next and final step (I’m a simple man) is mapping out the long-term business needs and other specifics for your long-term income and expenses. For most of you, the income will include farming for a while, including grain sales, equipment sales and then cash rent and other income such as social security, investments and diversified income from other sources or businesses you work in. The expenses include land, equipment and housing notes, primarily.

The important part is physically putting the numbers in to see what the next 10, 20 and 30 years look like on paper. The worksheet calculates the income and expenses you input and allows you to select your ‘crystal ball’ inflation rate, investment return and anticipated tax implications.

I want peace of mind in your retirement and transition planning. I want you to know where you stand and what your needs are. I want you to feel comfortable with the hardest thing you have to do once in your life. And I’d like your transitioning partner, whether family or not, to know your needs and expectations as you navigate these next steps.

Do yourself a favor and take an hour or two to put on paper what you might have been putting off for too long or have yet to take the time to think about.

Shay Foulk
shay@agviewsolutions.com

Tax Turbulence: How Sunsetting Provisions Could Change Your Bottom Line

Thu, 19 Dec 2024 14:31:58 GMT

With 30 tax provisions set to expire at the end of 2025, the tax liabilities for family farms could increase at a time America’s farm families can ill afford any additional hits to the budget. Uncertainty surrounds the 2017 Tax Cuts and Jobs Act (TCJA) and American Rescue Plan Act (ARPA)–especially as a new administration is in route to the White House.

“The cost of the TCJA is significantly higher than was originally estimated in 2017. The newest estimate we’ve seen is that a full extension of the TCJA is going to cost $7.75 trillion through 2035,” says Pinion’s Beth Swanson. “With the budget reconciliation process and the expected cost, we’re worried that Congress is going to have to pick and choose which provisions of the TCJA are going to get extended next.”

According to research from USDA ERS, the impact of these expiring federal income tax provisions would increase tax liabilities for farm households by almost 9 billion. That’s a $2,200, or 12%, average increase per farm.

Increase in tax liabilities resulting from expiring Tax Cuts and Jobs Act (TCJA) provisions that would increase tax rates, decrease deductions, and restore personal exemptions.

(USDA, Economic Research Service and USDA, National Agricultural Statistics Service, 2018–2021 Agricultural Resource Management Survey)

Broken down by farm size, that looks like:

Low sales farms: Tax increase of about $700
Moderate sales farms: Tax increase of about $2,300
Very large farms: Tax increase of nearly $28,000

“Interestingly, in percentage terms, moderate sales farms are expected to have the greatest increase in tax liabilities at about 16%,” says Tia McDonald, USDA ERS. “They’re in an in-between area where they’re not quite getting some of the exemptions that higher income folks can take advantage of like bonus depreciation and even 179.

Farm CPA and Top Producer columnist Paul Neiffer adds, “Another part of it is the percentage increase of going from a 12% tax bracket to a 15% tax bracket. A lot of those moderate-income farmers also have 2, 3 or 4 kids that, under the current rules, qualify for the $2,000 tax credit, which is going to drop down to a $1,000 tax credit.”

As far as which provisions are the most important for farmers and ranchers, McDonald says the biggest impact will come from be provisions providing reduced individual income tax rates, an increased standard deduction, a cap on state and local tax deductions, and the elimination of the personal exemption, which would create an increase in total tax liability of $4.5 billion for all farm households.

“The reason for that is that it touches almost every farm household. So, the reach is quite broad,” she explains.

The Qualified Business Income Deduction
The second most important provision set to expire that McDonald lists is the qualified business income deduction, which provides farm households with positive business income a deduction equal to 20% of their qualified business income.

“Approximately 40% of low sales farms to almost 80% of very large farms receive that qualified business income deduction,” McDonald says.

Estimated Impact of Expiring QBI Deduction

(USDA, Economic Research Service and USDA, National Agricultural Statistics Service, 2018–2021 Agricultural Resource Management Survey)

Referring to the results of a recent survey, Kent Bacus of National Cattlemen’s Beef Association (NCBA) says even though this deduction hasn’t been around long, it’s been valuable to producers.

“As far as the 199A qualified business income deduction, with that being relatively new, we still had over half of the [1,200] respondents who have used it, and they’ve considered a very important tool,” Bacus says. “I think that’s something that we want to see continue in the next package.”

Child Tax Credit and Bonus Depreciation
McDonald says additional provisions, such as the child tax credit, the estate tax exemption, alternative minimum tax provisions and bonus depreciation, will likely have less of an impact on tax liabilities overall.

“Those are really targeted toward higher income farm households, so they don’t have quite the reach,” she explains.

Swanson, however, says the loss of bonus depreciation would still be notable for many.

“For bonus depreciation, sunsetting is a concern – especially because Section 179 isn’t really a one-for-one trade. With commodities that are heavier on equipment, producers tend to use bonus depreciation year after year,” Swanson says. “It’s more than just a timing difference. The loss of bonus depreciation will be a significant annual effect to many of the farmers that we work with [at Pinion].”

This is echoed by the results of NCBA’s survey as well.

“When you look at Section 179 and bonus depreciation, one of the key things we ask is, ‘If these tools weren’t available, how would that impact you?’,” Bacus says. “What we found is without access to these tools, about 25% to 30% of the respondents would have had to pay an additional $20,000 in taxes.”

The Timeline
Once the new administration is in place, Bacus believes we can expect Congress to act quickly.

“We have new leadership in the Senate and new leadership in the administration. They’re going to try to prioritize a couple of key things that will be important to the new administration, and a couple of those are going to be border security and taxes.” Bacus explains. “We’re looking for a lot of movement in those first 100 days.”

But Swanson says it’s possible that movement may not be focused on extending these provisions in the beginning.

“We are worried about President-elect Trump’s varied tax commitments and the distraction those might provide to getting the TCJA extended,” Swanson says. “I think the best thing we can do is wait and see. We will hope that the legislative process goes fairly quickly and Congress is able to avoid all of those distractions that may prevent us from getting TCJA expansion done.

Once these provisions are in focus, Bacus believes there are a few avenues it could take.

“With those tight margins in the House and the Senate, you are going to have to have some kind of bipartisan package that comes together. The big question is, are they going to update the tax code? Are they just going to extend it? Or will we potentially see a default if all these efforts fail,” Bacus says. “I think it’s unlikely that the efforts have failed, but the aggressive timeline that’s been proposed is always subject to the minutia and the swamp nature of Washington. That tends to slow things down.”

Neiffer expects an extension with a few key changes.

“I don’t think we’re going to see a permanent TCJA,” Neiffer says. “We’re going to see another three to five or five to seven years. Some of the provisions may become permanent and some will disappear. And you’re going to see some new ones come into effect.”

Your Next Read: Will the Tax Cuts and Jobs Act Get a Second Life?

Why Buying Used Equipment Could Make Sense This Year

Wed, 11 Dec 2024 16:36:31 GMT

With tight margins upon us, you might not think purchasing equipment is a smart move during this year-end planning season. But Todd Welle, business development leader at Honour Ag, believes otherwise.

Welle joins the Top Producer podcast with host Paul Neiffer to share why continuing to replace your fleet could be a smart move for some operations.

“We see a lot of growers going to auctions and the used market to get that one-to-two-year-old asset, and it’s making sense as interest rates are going down,” Welle explains. “Replacing an asset and bringing more debt to your operation doesn’t seem like the right thing to do, but it’s probably one of the smartest things to do.”

He says there’s a lot of pent-up demand in the marketplace that stems from the high price of equipment over the past few years. However, there’s been a drop in the price of used equipment more recently.

“There was the expectation there was going to be a correction, and the ones who go through these corrections and get some of the good deals will see in two to three years that it was a brilliant move,” Welle says.

Equipment Price Outlook
Welle anticipates the current financial cycle the industry is in to last between 18-24 months - depending on weather, the farm bill, etc. With that trend will come lower production.

“The manufacturers will cut back,” he says. “2025 and 2026 will have lower production and there will be a gap there. It will probably be 2027 before it ramps up again.”

But don’t expect a repeat of what came from the lower production volumes during the pandemic just yet.

“There’s enough inventory out there holding the equiment market together - there wasn’t any inventory two years ago,” Welle says. “Dealers will have some used inventory, and there will be some good deals out there. This won’t be a five-year drought.”

Listen to this episode of the Top Producer podcast to hear more from Welle.

Your Next Read: Machinery Pete: Now’s The Best Time To Be An Aggressive Value Buyer

USDA: Family Farms Still Dominate A Majority of U.S. Farms

Tue, 10 Dec 2024 20:38:54 GMT

Here are eight takeaways illustrating the landscape of U.S. farm productivity and financial resources.

Released on Dec. 10, USDA-ERS published its 2024 edition of America’s Farms and Ranches at a Glance . This publication, which pulls from survey data collected at the end of 2023, aims to give a snapshot of the U.S. farm economy.

Takeaway 1: In total, family farms accounted for about 96% of total farms and 83% of total production in 2023.

A big part of the study breaks down different characteristics of farms by type. The first differentiation is between family farms and non-family farms. Per the USDA, a family farm is a farm in which the majority of the business is owned by an operator and/or any individual related by blood, marriage, or adoption, including relatives who do not live in the operator’s household.

Among family farms, farms are divided by farm size measured by gross cash farm income (GCFI).

Most U.S. farms (86%) are small family farms (GCFI less than $350,000); these farms operate on 41% of U.S. agricultural land and account for 17% of the total value of production
Midsize family farms (GCFI between $350,000 and $999,999) accounted for 18% of agricultural land and 18% of the total value of production.
Large-scale family farms (GCFI of $1,000,000 or more) accounted for 48% of the total value of production and 31% of agricultural land in 2023.
GCFI includes sales of crops and livestock, government payments, other farm related income, and fees received by operators from production contracts.

Takeaway 2: Large-scale family farms dominate the production of many selected commodities

Large-scale family farms accounted for the majority of the value of cash grains and soybeans (52%), cotton (71%), dairy (77%), and specialty crops (59%) production
Small family farms produced 45% of the value of hay and 46% of the total value of U.S. poultry and egg output
22% of the value of beef production occurred on small family farms, while 39% occurred on large-scale family farms. Small family farms often have cow-calf operations, while large-scale family farms are more likely to operate feedlots
Compared with 2022, nonfamily farms comprised a larger share of the value of production, with their value of beef production increasing from 11% in 2022 to 26% in 2023.

Takeaway 3: Small family farms and non-family farms are potentially more financially vulnerable.

The data in this report was collected when net cash income was above the 10-year average. USDA measures financial performance by operating profit margin (OPM), with a noted high-risk zone of less than 10 OPM.

In 2023, between 52 and 85% of small family farms, depending on the farm type (retirement, off-farm occupation, low sales, moderate sales), had an OPM in the high-risk zone.
Around 53% of nonfamily farms had an OPM in the high-risk zone.

Takeaway 4: Use of credit and loans is an important resource for all farms.

The share of farms (28%) using credit in 2023 was lower than the previous 10-year average of 31%.
Within every type of farm, on average, 80% or more of debt came from traditional lending sources, including the Farm Credit System, USDA, FSA, and commercial banks, compared with trade credit or other sources.

Takeaway 5: Less than one-quarter of farms use government payment programs.

The percentage of farms receiving government payments ranged from 21% for small family farms to 44% for midsize and large family farms.
Small family farms received 76% of all payments from USDA’s Conservation Reserve Program (CRP)
41% of all USDA, Natural Resources Conservation Service (NRCS) working lands program payments were received by small family farms, which includes Environmental Quality Incentives Program (EQIP) and Conservation Stewardship Program (CSP).
Midsized and large-scale family farms accounted for 66% of the total value of production and received 71% of countercyclical-type payments, which include Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) and 61% of all other payments, which include Dairy Margin Coverage, agricultural disaster, and ad-hoc payments

Takeaway 6: 16% of farms participated in federal crop insurance programs. This is a slight increase from 14% in 2022.

66% of farms producing row crops (cotton, corn, soybeans, wheat, peanuts, rice, or sorghum) purchased Federal crop insurance.
17% of farms growing specialty crops, such as fruits, vegetables, and nursery crops, and 12% of farms producing livestock purchased Federal crop insurance.

Takeaway 7: Many farms rely on off-farm income.

Most (85%) of all U.S. farm households earned the majority of their total household income from off-farm sources
52% of family farm households had negative farming income
Overall, 42% of farm households have income below the US median in 2023.

Takeaway 8: New insights on unpriced stored grain highlight the risk management tool.

For the first time, the study asked about unpriced stored corn, soybeans and wheat.

The largest volumes were in post-harvest months.
The average share of total stocks as of December 2023 that was unpriced was 38.6% for corn, 32.9% for soybeans, and 20.4% for wheat
Unpriced off farm storage is less commonly used

Click here for the full report from USDA-ERS

Will the Tax Cuts and Jobs Act Get a Second Life?

Mon, 09 Dec 2024 14:00:00 GMT

It’s been the question hanging over CPAs, tax professionals and business owners: Will Congress extend the Tax Cuts and Jobs Act (TCJA)?

“This is potentially one the most important things we’ll see in the next couple of years,” says Avery Frank, manager at CLA.

The TCJA significantly increased an individual’s lifetime exclusion amount for gift and estate taxes, and it needs extended to continue its provisions.

“Currently, the figure we’re talking about as the double amount is $13,610,000 that any person may transfer during their lifetime or after to individuals or trusts for the benefit of the folks they care about,” Frank says. “For a married couple, that means they have presently to transfer about $27 million of wealth.”

With the unknown of if and when Congress will act, CLA provides this guidance based on estate size. The viability of certain plans will depend on types of assets you own, their tax attributes and your wealth transfer time horizon, which is why CLA encourages clients to develop a team of advisers to help them.

Two spouses with less than $14 million in net worth estate:
• Fund 529 plans

• Annual giving

• Charitable giving

• Fund a grantor trust

“With these estates, they probably have enough lifetime exclusions to shelter from the estate tax,” he says.

Two spouses with $14 million to $28 million in net worth estate:
“This is definitely an estate size that I would say we need to have a plan in place,” he says. “We need to know what we’re going to do, if certain outcomes come to pass. An estate of this size would realistically have to give up all their assets to be able to shelter their entire estate.”

Some ideas include:

• Gifting without gift splitting

• Life insurance trusts

• Use discountable assets

Two spouses with more than $28 million in net worth estate:
“Once we’ve gone through and done some really good planning using lifetime exemptions to the greatest extent possible, we’re going to turn up the heat,” Frank says. “There’s interesting things that happen for taxpayers of this estate size, and some opportunities they may not normally be comfortable with.”

He gives three tools as examples:

1. Prepaying gift tax, instead of paying estate tax, typically results in a lower amount of tax being paid. Frank gives the perspective that it represents a significant opportunity to reduce future estate tax.

2. For clients with existing grantor trusts, get the trustee of those trusts to generate taxable income. The taxable income created in the grantor trust is taxed back to the grantor.

3. Sell assets to grantor or non-grantor trusts.

“Today is the day. Yesterday would have been better,” Frank says. “Form the team, define the plan. You’re on the clock.”

How To Leverage The 0% Tax Bracket

Wed, 27 Nov 2024 12:00:00 GMT

There are many situations where farmers can sell assets they have held for over a year and owe no federal income taxes on the gain.

Capital gains that are taxed in the old 15% tax bracket are actually taxed at a zero rate. For 2025, single taxpayers hit the top of this tax bracket at $48,350 of taxable income. Married couples top out at twice that amount, or $96,700.

Remember, these taxable income numbers are after itemized deductions or your standard deduction. The standard deduction for 2025 increases to $30,000 for a married couple, which means a farm couple could have long-term capital gains of $126,700 and owe no federal income tax (assuming they have no other income).

This can have great planning opportunities.

First, if a farmer has a C corporation and a personal income that is low for the current year, then paying a dividend from the corporation makes sense because the divided will be tax free. Plus, the corporation does not even need to pay out any cash. It can instead elect to distribute a “deemed” dividend, which is simply a paper entry to debit dividend and credit paid in capital. This also has the result of increasing the tax basis in the corporate stock, which can be helpful if the corporation is liquidated or converts into an S corporation.

Capital Gains Planning Example
Jim and Sara estimate their taxable income for the year will be about $50,000. Their corporation issues a deemed dividend to them of $75,000 because they would like to keep the cash in the corporation for operating purposes. They can also elect to pay a cash dividend to themselves and then loan the proceeds back to the corporation. This income added to their personal return will be taxed at zero for federal income tax purposes. They will pay state income if their state has such taxes.

Another option involves selling stock investments at a gain if you know the gain will be tax-free. There is a rule against repurchasing stocks within 30 days if you have sold the stock at a loss, but in this case, you are actually locking in long-term capital gains to be taxed at zero. The worst that can happen is you might be out a little bit of a bid/ask spread on repurchasing the stock if you use an online no-commission company.

Selling Assets Example
Andy and Gretchen estimate their taxable income at zero. They were early investors in Tesla and elect to sell Tesla stock that generates a long-term capital gain of about $125,000. They decide to not repurchase Tesla but will elect to use it as working capital for their farm operation. This gain will be tax-free at the federal level.

The bottom line as you do your tax planning at year-end is to review any assets you have held for at least a year to determine if your taxable income remains in the 15% tax bracket. If so, you might want to consider selling all or part of that asset to lock in tax-free money (at least at the federal level). Or, if you have a C corporation, always review that each year to determine how much of a tax-free dividend you can pay out.

Bushel Expands Digital Payment Network

Mon, 25 Nov 2024 20:38:30 GMT

Agronomists, truckers, custom harvesters and more can now be part of Bushel’s payment network. The company says this helps farmers and agribusinesses avoid the hassle of traditional checks and ACH delays, achieving near real-time payments tailored specifically for agriculture.

This new feature in Bushel Wallet allows verified farmers and agribusinesses to invite their trusted partners into Bushel’s digital payment network for fast and secure payments.

Bushel Wallet account holders can click the “Send An Invite” button. Bushel then works with trusted identity verification services to ensure that only legitimate businesses join the network, meeting strict banking standards.

For agribusiness accounts, this new feature gives an efficient way to bring an entire customer base into digital payments.

Bushel highlights how its invitation-only model strengthens business relationships—enabling transparent payment status and reducing time spent managing the process.

Additionally, Bushel now integration with Levridge (an ERP system built on the Microsoft Dynamics 365 platform.)

The Levridge integration includes real-time access to contracts, tickets, settlements, and commodity balances, helping both staff and farmers access critical information instantly through the Bushel customer portal.

Bayer's Shares Sink to 20-Year Low on 2025 Earnings Fall Forecast

Wed, 13 Nov 2024 21:39:22 GMT

By Ludwig Burger and Patricia Weiss

Bayer said on Tuesday that weak agricultural markets mean its earnings are likely to fall further next year, sparking a sharp fall in the German company’s shares and piling pressure on its CEO to deliver on his turnaround efforts.

Chief executive Bill Anderson has started cutting jobs, speeding up decision-making and slashing red tape in a bid to turn around the embattled industrial group, while putting plans to break up its diversified businesses on hold.

Shares in Bayer were down 11.6% to 21.57 euros at 1004 GMT, their lowest level in 20 years following its update.

“We’re in the midst of a big agriculture downturn. And that’s very frustrating for people ... We understand the investor sentiment, but we remain very optimistic that we’ve got a strong future,” Anderson said in the statement.

He also pointed to strong launches for Bayer’s new drugs Nubeqa for prostate cancer and Kerendia for kidney disease.

However, Markus Manns, a portfolio manager at Bayer shareholder Union Investment in Germany, criticized the CEO for not having publishing medium-term financial targets, which need to be addressed to win back trust.

“Bayer’s transformation needs to be urgently accelerated and management needs to finally communicate a sustainable growth strategy with specific mid-term targets for sales, earnings and debt reduction,” said Manns.

Chief financial officer Wolfgang Nickl said in Bayer’s quarterly earnings statement it expected “a muted outlook on top and bottom line next year with likely declining earnings”.

Based on earnings before interest, tax, depreciation and amortisation (EBITDA), and adjusted for special items, the 2025 forecast would mean a third consecutive annual decline, after the group on Tuesday also lowered its projection for 2024.

Bayer said that the earnings measure, when adjusted for currency impacts, would likely be between 10.4 billion euros ($11.1 billion) and 10.7 billion euros, down from a previous 10.7-11.3 billion euro forecast and last year’s 11.7 billion.

Its July-to-September EBITDA, adjusted for one-offs, fell almost 26% to 1.25 billion euros, missing the average analyst estimate of 1.31 billion euros posted on Bayer’s website, with Bayer citing weak Latin American agricultural markets.

Regulation
Bayer’s $63 billion purchase in 2018 of seeds and pesticides maker Monsanto under Anderson’s predecessor was a long-term bet on robust growth in farming supplies which has so far misfired.

Debt and costly U.S. product liability litigation over disputed claims that Monsanto weedkiller Roundup causes cancer are further burdens which Anderson is struggling to shake off.

Bayer shares have lost close to 80% since the Monsanto deal was closed in 2018 and about 70% since it was agreed in 2016.

U.S. agrichemicals competitor Corteva and the agriculture unit of Germany’s BASF have also been hit by lower prices as weak produce prices weighed on demand.

Bayer’s shares trade at 4.6 times forward earnings over the next 12 months, well below BASF at 12 and 18.8 for Corteva. The ratio is widely used to gauge the relative value of stocks.

Bayer said its business is set to suffer more because U.S. approval for new soy seeds to be used with weedkiller dicamba will not be in time for the 2025 sowing season and EU regulators will pull insecticide Movento from the market under the bloc’s environmental agenda known as the Green Deal.

In addition, cost-conscious U.S. farmers are turning to cheap generic copies of Bayer’s pesticides, it said.

Bayer said that special charges of 4.1 billion euros, mainly from write-downs on intangible assets in its Crop Science division, resulted in a quarterly net loss of 4.18 billion euros, compared with a 4.57 billion euro loss a year earlier.

It confirmed its previous currency-adjusted guidance for 2024 sales and earnings per share before certain items.

(Reporting by Ludwig Burger, Editing by Rachel More, Kirsten Donovan and Alexander Smith)

Chasing Dollars (or Pennies) With Carbon Farming

Wed, 23 Oct 2024 20:14:09 GMT

The move to climate-smart farming practices has felt like a disorganized and chaotic movement of different opinions and attitudes toward an elusive and dynamic end point.

That is — herding cats.

The original plan for carbon farming was carbon offsets. Eastern Iowa farmer and carbon-market early adopter Ben Riensche explained that approach very clearly during a recent farmer forum on “ AgriTalk .”

“It’s like paying you to go to Jenny Craig to lose weight for me,” he said.

There are still carbon offset opportunities, but the broader market is in transition. Instead of an individual farmer contracting to change production practices to offset the carbon output of another producer, the effort now is to maximize crops with the lowest carbon footprint in the production of biofuels.

The theory is other end users will eventually need to compete to have the crops with the lowest carbon footprint to produce whatever they produce. Maybe even if that’s beef, pork or poultry.

Enter 45Z Tax Credits

Starting Jan. 1, 2025, registered biofuel producers will be eligible for 45Z tax credits totaling as much as $1.75 per gallon. The biggest incentives are expected to be paid to producers of sustainable aviation fuel (SAF), which use ethanol and bio-based diesel produced with crops with the lowest combined carbon intensity (CI) score.

If an ethanol or oilseed crush plant can convince all growers who send crops to its plant to make an effort to lower their carbon intensity score, they might be in line to capture a chunk of that $1.75 per gallon and distribute it to their suppliers via higher corn and soybean bids.

Another option is to put all producers feeding crops into biofuel facilities on the same footing by capturing CO2 and locking it up underground. That would likely make the facility eligible for 45Z credits.

But Is It Worth It?

The beauty of this is many producers are already using production practices that lower their CI score. The key will be to document and certify sustainability efforts. If you are doing the bare minimum to reduce your CI score, you might be eligible for a small share of the 45Z tax credit.

If what you’re doing now generates the greatest return, including the 45Z incentive, you should feel no pressure to change what you are doing. If, however, a change here or there on the production side will lower your CI score enough to result in a payment that would more than offset increased costs or lower production, then maybe that’s something to think about trying.

The analysis is straightforward: If a change in production practices will earn you more net income per acre, it’s a change worth considering.

Your Next Read: Treasury Dept. Finally Releases Guidance on the Sustainable Aviation Fuel 40B Tax Credit

Improve Your Farm's Profits With Financial Planning

Fri, 18 Oct 2024 20:59:54 GMT

By Heather Gieseke

When harvest winds down, it’s tempting to look forward to a few weeks of rest. Not so fast.

Your next step should be financially planning next year’s crop to get a jump-start on profitability estimates. Many farmers are quick to look back at what the markets have done or the sales they made and use that as a strategy for the year ahead, which is exactly what you shouldn’t do.

A healthy strategy starts with understanding your break-even costs and budgeting your inputs. Getting specific about your seed and crop health plans, and budgeting those in advance of making purchase and crop sales decisions, can elevate your negotiating skills and save you more than you realize in the months to come.

Put Pen to Paper

Transportation, drying, storage costs or opportunities, tillage passes and hired help are often the most overlooked factors in a break-even analysis, not to mention expanding your markets. Whether it’s with pen and paper, an Excel sheet or another software tool, having a detailed financial plan aligned with your storage and delivery capabilities ahead of input purchases just might be the single most important task you do for your farm operation.

Get down to the field level. To start, analyze what’s happening on each individual field. What’s the reality of pest control, fertility, seed, labor and fuel expenses?
Think about your transportation costs. Where do you typically deliver that field’s grain? Are you selling enough bushels prior to harvest to manage your storage capabilities, or are you still in the trap of selling grain over the scale or storing it at the elevator?
Project profits. Determine what profit you realistically hope to achieve. Then narrow your budgets for purchasing decisions and establish marketing targets aligned with your break-even costs and projected income numbers.

For grain sales, are you paying attention to cash prices only? Strategic basis and futures decisions can be a big opportunity to improve revenue, so set targets for each. Are you exploring all your markets or just the most logistically convenient?

For inputs purchases, if you come to the negotiating table equipped with 2024’s numbers and a budget for 2025, you will be far more impactful than haggling a few dollars here and there.

Be Diligent

This kind of discipline on your break-even and profitability goals will make purchase decisions and marketing your grain less emotional and overall less stressful. Remember, the most important decision you make for next year might depend on the calculations you make before you sit down to Thanksgiving dinner.

Your Next Read: Making Purchases for 2025: All You Can Do Is Your Best!

How One Farmer Turned the 1980s Disaster Into Enduring Success

Mon, 07 Oct 2024 11:54:48 GMT

Fall’s sun drapes across the sky in Nokomis, Ill., as Skip Klinefelter admires another season’s crop. Through four and a half decades of turbulence and tribulation, he continues to pursue his purpose at the helm of his ever-evolving operation.

“I started off at the top and worked my way to the bottom,” Klinefelter smirks. “Then I started farming.”

With plans to build race cars that later found him running a tire shop, in 1977 he returned home to farm with his father. A 50/50 split on 456 original acres, the Klinefelters went to work.

“I always hated hogs and loved cattle, but I couldn’t afford to get into cattle,” Klinefelter explains. “So, we built a 250-sow specific pathogen free seedstock operation and grew the farm to 3,200 acres along with doing custom work.”

Then the 1980s hit, hard.

“There was no light at the end of the tunnel, and nobody had any reason to believe it was going to get better,” Klinefelter recalls.

In 1983 his crops were wiped out by serious drought. By 1988, another drought arrived, but he had insurance and hogs to help with cash flow.

“We were robbing Peter to pay Paul to get through it,” Klinefelter explains. “I guess we could have gone broke and out of business, and some people said that’s what we should do because it would be less painful, but I refused to take that route.”

Klinefelter’s wife, Barbara, had off-farm jobs that provided health insurance, which was a big help. She first worked at the local ASCS office (known as the Farm Service Agency today) then went back to school for her masters while teaching English and dual credit college courses at the local high school.

It took Klinefelter 10 years to overcome the 80s. Then the late 90s came knocking. Another short crop and hog prices falling to 7¢ per cwt forced him to rethink his future.

“I thought in four to five years the hog market was going to see serious consolidation,” Klinefelter explains. “I was wrong. It took 18 months.”

Not willing to take on a mountain of new debt after spending the last two decades paying off loans, Klinefelter made the decision to exit the hog business and focus on precision farming.

“I watched a local equipment dealer service our seed meters, and I didn’t think they did a very good job,” Klinefelter laughs.

That moment kicked-started a passion for ag equipment and 20 years of investment. He now owns and runs the largest independent precision ag business in Illinois. While he knows the current ag market is in a downturn, he’ll take today over the 1980s every time.

“I’ve definitely made mistakes and decisions that were expensive,” Klinefelter says. “So far, I’ve been able to get through to the other side of them.”

State of the Economy

Following record highs in 2022, the latest projections from USDA-Economic Research Service (ERS) shows overall farm sector income is forecast to fall once again in 2024 but at a slower rate than it did a year ago. Economists now project a drop of $6.5 billion. That’s down 4.4% from 2023 but much better than the February projections that suggested a decline of 26%.

Essentially, better livestock margins are helping improve the overall picture of the ag economy with cash receipts expected to end the year close to $267 billion. That’s up more than 7% year over year.

The major grains, however, continue to struggle. USDA-ERS economist Carrie Litkowski says the value of crop production is forecast to decrease $25.6 billion versus 2023 with the largest decline from corn and soybeans.

USDA–ERS stresses the importance of looking at the numbers with the past 20 years in mind.

“The farm sector balance sheet is projected to remain strong,” Litkowski says. “Net farm income fell 22% from 2022 to 2023, and in 2024 net farm income is forecast to fall nearly 7% [when adjusted for inflation]. Even with these expected declines, both sectors in 2024 are forecast to remain above their 20-year-average.”

The Food and Agriculture Policy Research Institute (FAPRI) at the University of Missouri updated its baseline projections in mid-August. It stretched $4 corn through the end of the decade along with $9 to $10 soybeans and sub-$6 wheat.

“In the absence of new shocks to the weather, the macroeconomy or policy, projected prices generally remain near current levels over the next five years,” according to FAPRI’s report.

The biggest challenge remains the cost of production. Without some sort of adjustment to either side of the balance sheet, the finance community says breakevens could turn negative in 2025.

“If you look at input prices, they’re about 40% higher than they were in 2014,” says Tony Jesina, senior vice president of insurance and consumer lending at Farm Credit Services of America. “That’s a lot more pressure on margins, and producers really, in effect, have more dollars at risk than they’ve ever had before.”

Lending in the ’80s

The farm crisis of the ‘80s left a mark on all those who experienced and lived through the inferno of scorched balance sheets and farmstead graveyards — the angst and anguish coloring their outlook for every season henceforth.

Retired Indiana ag lender Joe Kessie was one of them. He graduated from Purdue University in 1983 with a degree in ag finance — during the height of the 1980s farm crisis.

Thrown in the fire but without a lifetime of professional baggage, Kessie says his biggest challenge was balance sheet visibility.

“The problem was balance sheet lending, and lenders did not have a system to calculate earnings from operations,” Kessie explains. “By using accrual earnings and earned net worth calculations, I was able to grow with the operations actually making money.”

That window helped him build relationships and find ways to help customers survive or even thrive.

“In the late ‘80s, early ‘90s, there were tremendous opportunities to take advantage of,” Kessie says. “Ground was $1,000 an acre or less in our area.”

Despite the pressure from falling prices and high input inflation, Kessie doesn’t expect a repeat of the 1980s for three reasons.

“Back in the ‘70s or early ‘80s, all the farm rates were variable. When rates skyrocketed, basically all the debt on the balance sheet went up,” he says. “Today, about any kind of term debt is fixed at pretty attractive rates. These higher interest rates do affect operating loans or if a farmer makes a new equipment purchase, but the other debt on the balance sheet is not affected.”

He also believes overall farm finances and management prowess is much improved.

“The farm balance sheet was pretty leveraged back then versus now,” Kessie says. “Plus, the management of farms is definitely better today than it would have been in the ‘70s and ‘80s. A lot of the inefficient operations, unfortunately, didn’t make it.”

Additionally, new investment funds are helping to support land values by providing demand.

“There are plenty of farmers still holding cash, and there’s a strong interest from investors and investor funds,” Kessie says. “None of that was there in the ‘80s to support the market.”

From weathered brow, cracked hands and faded caps, the hard-learned lessons of thin margins and financial potholes are worth heeding. Klinefelter has absorbed years of uninvited turbulence and kept moving forward. He offers these six tips for surviving tough times.

1. Communicate, Communicate

If your farm is facing financial hardship, be honest with your lender, landlords and family. Klinefelter believes that’s one of the reasons he survived the 1980s.

“We had a negative net worth in 1987, and I think the only reason they let us survive is because of our communication,” Klinefelter says. “They knew where I was, what was happening, what our plans were, and they even helped to design some of our plans.”

2. Pay Your People

Sometimes how the money gets spent requires a choice. Klinefelter says making payroll the first option is a good investment.

“I’ve heard stories of people not being able to pay their help or not paying employees to instead pay someone else,” he says. “We’ve always been open about what we’re doing.”

3. Rethink or Redefine Success

Take a hard look at career and business goals.

“I spend more time thinking about unwinding my businesses and what is going to survive after me,” Klinefelter says. “My kids are successful and not coming back to the farm. My biggest success is three good kids and eight good grandkids.”

4. Focus on the Bottom, Not the Top

Farmers tend to focus on the best yielding genetics or selling at the highest point in the market. Instead, they should put more emphasis on cutting off the bottom.

“Raise your average by cutting off the worst performers or bottom 20%,” Klinefelter suggests. “People spend so much time trying to hit a home run, they forget about the singles and doubles.”

5. Chase Real ROI

Farmers are known to slam the checkbook shut when markets head south. You don’t have to adopt every new technology, but pay attention to what works and make decisions that fit a need and have a good ROI.

“Take the Keeton seed firmer,” Klinefelter says. “At $5 corn, there’s a 1,200% return on that product in the first year, and it lasts for three to four years. Getting a finger meter checked can cost $35, but it provides the same return. Don’t be blind to a real opportunity.”

6. Know Your Plan, Adjust Your Plan

Making a plan is important for your business, but it doesn’t mean it shouldn’t be flexible.

“Every plan ought to be a living plan, no matter what it is,” Klinefelter suggests. “You can’t lock in and just go tunnel vision. Some things you need to see to the end, but there are other times you need to step back and say: Okay, is this working or not?”

Your Next Read: Courage And Confidence Lead The Way For This Iowa Farmer

USDA’s Latest Farm Income Data Looks Brighter Than Early 2024 Numbers

Thu, 05 Sep 2024 20:12:08 GMT

USDA–Economic Research Service (ERS) has released updated projections for 2024 farm income, and though it’s still anticipated to decline, the outlook doesn’t look quite as dim as it did earlier this year.

The new numbers show net cash farm income for the 2024 calendar year will fall $12 billion, which is about 7% down from 2023, and net farm income will fall $6.5 billion or 4.4%. This is compared to projections released in February of this year that suggested net farm income would fall 26%.

“There are a lot of factors going on here, but to me, the primary ones are that the revisions reflect expectations that animal and animal product cash receipts will increase while production expenses will fall,” says USDA–ERS economist Carrie Litkowski. “This is largely due to the incorporation of new data.

Litkowski shares the primary cause for the fall in 2024 farm income comes from commodity prices. Cash receipts or sales are expected to decrease by $27.7 billion. When combined with the inventory adjustment for crops, the value of crop production is forecast to decrease $25.6 billion from 2023. The largest decline comes from corn and soybeans, though wheat producers are expected to have a nearly 50% decline in average net cash farm income in 2024.

USDA ERS Row Crop Cash Receipt Projections 9-5-24

(USDA ERS)

But it’s not all bad news for crop farmers. Fertilizer expenses are expected to fall almost 10%.

Better News in Livestock
The outlook for livestock producers is more positive. Total animal and animal product recipes are expected to increase by $17.8 billion, or 7.1%, with the main driver coming from egg prices.

“Receipts for eggs are perhaps the biggest story here, in that they are forecast to see the largest increase in 2024 at 35%, or about $6 billion. Eggs alone account for a little more than half of the total increase in animal and animal product receipts,” Litkowski says. “Back in February, we did not anticipate that egg prices were going to increase as much as they have. That’s due to supply restraints we’re seeing due to the avian flu.”

Dairy farm businesses can expect to see the largest increase in average net farm income at 47.2%. Litkowski attributes this to higher milk receipts and lower expenses in 2024.

Farm businesses specializing in hogs are forecast to have an 11% increase but remain low relative to prior years. Beef farm businesses are projected at a 9.7% increase and poultry will see an 11.7% increase.

USDA ERS Livestock Cash Receipt Projections 9-5-24

(USDA ERS)

These operations should see big savings in feed as well, with an anticipated decline of 12%.

Geographic Breakdown
Looking at the data by region, six of USDA’s nine regions will see lower average net cash farm income. Farmers in the heartland states will be hit the hardest with a 23% decline.

Income increases are forecast for producers in the northern crescent and fruitful rim regions — between 1% and 4%. Litkowski says this is where many dairy farms are located and can be attributed to the expectations for higher dairy receipts and lower expenses.

“Regional performance of farm businesses can vary considerably due to the strong geographic concentration of certain production specialties or average farm size,” she explains. “Across all farm businesses, average net cash farm income is forecast to decrease 9% from 2023 to 2024 in nominal dollars.”

USDA ERS Farm Income By Region 9-5-24

(USDA ERS)

Household Income Remains Unchanged
Total farm household income is projected to increase 1.7% in 2024 to $99,683. However, when inflation is taken into consideration, Litkowski says she categorizes it as “relatively unchanged”.

“1.7% is less than the expected rate of inflation in 2024, so it’s really more like a decline of 0.7% in real dollars,” she explains.

The Big Picture
While this year’s income projections may have producers concerned about their bottom line, USDA–ERS stresses the importance of looking at the numbers with the past 20 years in mind.

“The farm sector balance sheet is projected to remain strong,” Litkowski says. “Net farm income fell 22% from 2022 to 2023, and in 2024 net farm income is forecast to fall nearly 7%. Even with these expected declines, both sectors in 2024 are forecast to remain above their 20-year-average.”

USDA ERS Farm Income 20-year Average 9-5-24

(USDA ERS)

Click here for the full report.

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