MT. JULIET, Tenn. (DTN) -- USDA forecasts 2024 net farm income 4.4% lower than last year at $140 billion. That's a sharp reversal from USDA's February forecast, which called for a 25% decline in net farm income, the agency's broad way of measuring profits across the various ag sectors.

Net cash farm income, which accounts only for gross cash income minus cash expenses, is forecast to decline 7.2% from 2023 to $154 billion. That's also up sharply from USDA's previous forecast. The agency updates its farm income forecasts in February, September and December.

Higher cash receipts for animals and animal products and substantially lower production costs, mostly in lower feed expenses, more than offset steep declines in cash receipts for grain growers. Most other income factors saw small adjustments from the previous forecasts.

Adjusting for inflation, the net farm income forecast is down 6.8% from last year while the net cash farm income forecast is down 9.6%.

CASH RECEIPTS

Overall, cash receipts are forecast to decrease $9.8 billion, or 1.9%, from 2023 to $516.5 billion.

Total crop receipts are forecast to decline 10% to $249 billion due to lower corn and soybean receipts. Corn receipts are anticipated to be 20% lower than last year while soybeans are forecast to drop 14.6%. Both are sharply lower than USDA's estimates in February.

In livestock, USDA has changed its tune. It forecast a 2% decline in receipts in February, but now sees animal/animal product receipts climbing $17.8 billion, or 7.1%, to $267.4 billion. Chicken eggs are forecast to see the largest year-over-year percentage increase, but receipts for cattle and calves are expected to grow 6.5% due to higher prices. The dairy industry has also seen a rebound from last year with receipts up 9.4%.

DIRECT GOVERNMNET PAYMENTS

Direct government payments are forecast to decline 15% from 2023 to $10.4 billion. These payments do not include crop insurance indemnity payment but reflect farm bill programs and supplemental or ad hoc disaster assistance.

Conservation payments from USDA's Farm Services Agency and Natural Resources Conservation Service are expected to total $4 billion in 2024, up 11% from last year.

Payments from the Agriculture Risk Coverage and Price Loss Coverage programs are forecast to decline, with lower payments anticipated for both programs.

The Dairy Margin Coverage Program is forecast to pay $100 million in 2024, $1 billion less than 2023.

EXPENSES

Farm sector production expenses are forecast to decline by $4.4 billion to $457.5 billion compared to their 2023 levels. That's down 1%.

Feed, fertilizer (including lime and soil conditioner) and pesticide expenses are forecast to fall back the most, while livestock and poultry purchases see the largest dollar increase since 2023.

USDA thinks farmers will spend $70.2 billion on feed this year, 12.3% less than in 2023.

Labor expenses are forecast to rise $3.4 billion, or 6.9%, to $52.2 billion.

Livestock and poultry purchases are projected to grow by $5.2 billion, or 12%, to 48.1 billion.

Interest expenses are forecast to grow by $1.8 billion to $30.3 billion, or 6.3%, above 2023. This reflects both higher rates and higher total debt levels.

Fertilizer expenses are projected to decline by $3.5 billion, or 9.7%, from 2023 to $32.4 billion.

View the full report here: https://www.ers.usda.gov/….

Katie Dehlinger can be reached at katie.dehlinger@dtn.com

Follow her on social media platform X at @KatieD_DTN

(c) Copyright 2024 DTN, LLC. All rights reserved.