Over the past three years, we have written a lot of articles for Southern Ag Today about the need for a new farm bill that increases the support provided by the farm safety net. While it was important three years ago, it is much more important now. The steady decline in market prices has continued, with current price projections from USDA below the average cost of production for some crops (Table 1). Why? While costs for some inputs have decreased from their 2022 highs… commodity prices have fallen more. While Marketing Year Average (MYA) prices in Table 1 don’t look very good, current futures prices at harvest look even worse.
Some producers still have their 2023 crop in storage, holding on and not wanting to sell below their cost of production. The 2024 harvest is not far away. Using corn as an example, the USDA projected marketing year average price is $4.40/bu for the 2024/25 marketing year which is right around the U.S. average cost of production. That would mean producers still holding their 2023 crop would be looking at two crops in a row not making any money. Reports from Federal Reserve banks around farm country indicate loan delinquencies are on the rise. What does all this mean?
Either we see a farm bill this year or there will be loud calls for financial assistance for farmers. Recall, in the last presidential election year (2020), record amounts of assistance were provided to agricultural producers due to short-term price declines when the pandemic almost broke the supply chain. A strong farm bill would be much better than ad hoc assistance, but if Congress can’t come to an agreement… there will be pressure to help producers endure the current financial downturn. And, even if a new farm bill is put in place this Fall, the fact that it is not slated to kick in until the 2025 crop year – with support not arriving until Fall 2026 – will undoubtedly put tremendous pressure on Congress to help bridge the gap.
Table 1. Historical and Projected Marketing Year Average Prices for Major Commodities.
Outlaw, Joe, Bart L. Fischer, and Natalie Graff. “If It’s Not Time to Hit the Panic Button… We Are Getting Close.” Southern Ag Today 4(33.4). August 15, 2024. Permalink
