As the agricultural community braces for a drop in farmer income this year, USDA Chief Economist Seth Meyer sheds light on the reasons behind the anticipated decline. Meyer emphasizes the role of declining government payments in this trend, highlighting their connection to commodity prices.
“Direct government payments will contract again in 2024,” Meyer states, indicating an overall reduction in government intervention compared to the long-run average. He explains that these payments exhibit a lag effect, with payments in 2024 influenced by commodity prices from the previous year.
Meyer elaborates, stating, “For instance, the payments that farmers will receive in 2024 for Arkin PLC in October 2024 are related to prices in 2023.” Therefore, if prices were high in 2023, there will likely be fewer government payments associated with certain programs like ARC and PLC.
Overall, the decline in government payments reflects a broader trend of decreasing government intervention in the agricultural sector. With payments falling below the long-run average, farmers may face additional challenges in managing their finances and navigating market uncertainties.
