Kansas farmers felt the impact of the drought across the state in 2023, and it was reflected in their bottom lines.
Crop insurance and government payments were essential to farm income, said Mark Dikeman, executive director of the Kansas Farm Management Association.
The drought caused lower production, while the drop in grain prices occurred as a result of grains carried over from 2022 without prior pricing. This was one of his assessments in a KFMA summary of net farm income in June.
Accumulation base
In 2023, net farm income, which was calculated on an accrual basis, was approximately $98,300 and the lowest in five years in a snapshot of KFMA members. The peak of $319,180 occurred in 2021, then fell to approximately $177,700 in 2022. Net farm income in 2019 was approximately $109,000 in 2019 and $174,000 in 2020.
If crop insurance and government payments were removed from the equation, cumulative net farm income would have shown a loss of $18,149, he said. The reason was that net crop insurance amounted to $82,636 and government payments accounted for $33,812.
“This shows the need for some kind of support, whether it’s government payments or crop insurance, and that has made a difference in difficult years,” he said. Farmers in the western two-thirds of the state rely more on crop insurance and government payments than their counterparts in eastern Kansas.
In 2023, dryland corn crop yield was 106 bushels per acre; soybeans, 26 bpa; sorghum, 54 bpa; and wheat, 41 bpa. All of them were significantly lower than the five-year average.
Net farm income in the northwestern district of Kansas was $127,300. Other Kansas districts were southwest, $103,000; north central, $83,700; south central, $62,600; northeast, $97,300; and southeast, $116,400.
Expenses on seeds and fertilizers, which increased significantly from 2022, have remained at higher levels as the cost of production per acre increased from $292 in 2021 to $374 in 2023. Additionally, the cost of investment in machinery has increased of $281 per acre. in 2021 to $352 per acre in 2023. Dikeman said that was an increase of about $100 per acre from 2019.
Livestock production
One positive note in 2023 was rising livestock prices across all sectors, Dikeman said.
A graph on livestock company data showing return on variable cost per head showed that beef cattle calves cost $454; feeders, $530; background $111; and finish, $289.
Those numbers were significantly above the 2022 numbers.
Economists’ predictions for 2024 include:
• Will Mother Nature be kind?
• Can agricultural production compensate for lower producer prices?
• Will livestock producers continue to see a favorable year, although it may not be as strong as 2023?
Additionally, they noted the possibility of government payments being significantly lower across the board, including for agricultural risk and profit loss coverage and ad hoc/supplemental disaster relief, although that is a big unknown.
Sign up to receive HPJ Insights
Our weekly newsletter delivers the latest news straight to your inbox, including breaking news, our exclusive columns and more.
“Without the government payments, (farmers’) net farm income would not have had the year they had,” said Kellen Liebsch, KFMA associate director.
Jennifer Ifft, associate professor and Extension agricultural policy specialist at Kansas State University, said that based on what she has seen in Congress, she expects another one-year extension of the current 2018 legislation.
Balance sheets
Balance sheets remained strong, Dikeman said, but he highlighted the impact of financial stress. About half of farms in 2023 had cumulative net farm income of $50,000 or less. The top 25% of farms had net farm income greater than $369,000, while the bottom 25% had a negative NFI of $93,548.
Other trends were an increase in family living expenses, which rose to more than $120,000 for the first time annually as income taxes and self-employment taxes increased, as did food and transportation expenses. home, personal recreation and health insurance. Household expenses could be boosted by higher inflation than in recent years. Additionally, as profits increased in previous years, that may have encouraged families to spend more on other items.
“The other side of the coin will be reduced (family living) expenses in 2024,” Dikeman said.
About KFMA
KFMA has six districts and 11 offices. KFMA economists assist producers with services including accounting, record-keeping business analysis, plus benchmark analysis and income tax planning and management advice.
In 2023, an average farm in KFMA was about 2,316 acres with 1,634 acres under cultivation. The harvested hectares amounted to 1,739, as it was noted that there were cases of double cropping practices.
You can contact Dave Bergmeier at 620-227-1822 or (email protected).
Keynote USA
For the Latest Local News, Follow Keynote USA Local on Twitter.