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Georgia 2024 economic outlook better than U.S.; farm bill uncertain

by Jennifer Whittaker
Editor, Georgia Farm Bureau News

Posted on March 6, 2024 3:30 PM

Georgia’s chances of experiencing a recession this year are only about 33% compared to the United States’ higher probability of just under 50%. That was a positive takeaway from the 2024 Georgia Ag Forecast held Jan. 26 in Tifton.

Dr. Gopinath Munisamy, distinguished professor of agricultural marketing at the UGA College of Agricultural & Environmental Sciences (CAES), expects the U.S. economy will see a slowdown in its gross domestic product (GDP) – the market value of all the goods and services produced here. He forecasts Americans will invest less this year and there will be a modest increase in the unemployment rate. We will probably see slower growth in U.S. government spending and in exports of U.S. products. 

Georgia’s economic development successes, stronger demographics, resilient labor market and having households in strong financial health are reasons Munisamy thinks Georgia will only see an economic slowdown instead of a recession. 

However, a misstep by the Federal Reserve with interest rates, a financial crisis, an energy price shock or escalations in geopolitical conflicts could each trigger a recession according to UGA CAES economic analysis.

CAES economists say inflation will continue to ease, but don’t expect prices to fall to pre-pandemic levels. 

UGA Professor of Agricultural Marketing Gopinath Munisamy / photo by Jennifer Whittaker

Farm net income expected to fall

 On the national level, the USDA is forecasting that the net farm income for 2023 will be $151.1 billion, down $31.8 billion from 2022’s net farm income of $182.8 billion. Munisamy says the net income drop can be attributed to: crops and livestock prices falling about 5% from 2022; an increase in production expenses and interest rates of about 3.5% for crops and livestock; and a 22.3% decrease in government payments.

Georgia’s 2022 net farm income was $5.2 billion per USDA data, making Georgia 13th in the U.S. for net cash income. This is the highest net farm income Georgia has seen since 2017 when it reached about $3.5 billion and 2014 when it was about $3 billion. 

Munisamy said Georgia’s 2023 net farm income is likely to fall to the last 10-year average of $3 billion. This is better than 2020 when Georgia’s net farm income was just over $2 billion.

Farm expenses have steadily risen since 2020, and Georgia reached an historic high of about $9 billion in 2022. Farm input costs continued to increase last year. Ag production expenses are expected to drop slightly in 2024 with the largest changes seen in interest, fertilizer and pesticide costs.

Higher labor costs pose a threat to Georgia’s 2024 ag economy. Georgia fruit and vegetable growers continue to lose income to cheaper imports from Mexico and South America during Georgia’s growing season.

Agricultural lobbyist Bob Redding / photo by Jennifer Whittaker

Farm bill showdown

At press time in late February, farmers were waiting to see if Congress would write a farm bill or pass another continuing resolution by the March 1 deadline when the agriculture appropriation bill was set to expire.

On March 1, the U.S. House of Representatives passed a continuing resolution (CR) by a bipartisan vote of 320-99, and the Senate passed it with a 77-13 vote to maintain government funding at roughly FY23 spending levels for at least another week. Under the terms of the new CR—the fourth in four months—federal funding for USDA; the Food and Drug Administration; the Departments of Transportation, Housing and Urban Development; and Veterans Affairs will continue through March 8. Funding for the Department of Defense and all other portions of the federal government will continue through March 22.

There’s a good possibility the deadline for submitting the 2025 budget will come before the new farm bill is finished, said Bob Redding, an agricultural lobbyist.

The most recent farm bill was set to expire Sept. 30, 2023, but Congress passed a continuing resolution last year to extend it through the end of fiscal year 2024.

“There’s no additional money for the farm bill, so we’re operating [writing a new bill] with no new cash,” Redding said. “Crop insurance and production risk programs are losing shares. Nutrition programs are still the biggest segment of the farm bill. ”

According to the Congressional Budget Office, federal nutrition programs account for 81.1% of farm bill spending at $1.22 trillion. Crop insurance programs account for 6.7% of the farm bill budget at $101.3 billion. Commodity and related programs make up 4.5% of the bill’s budget at $68.6 billion, and conservation programs are allocated 4% of the budget at $60 billion.  

Farmers are seeking more funding for crop insurance programs, an increase in row crop reference prices to counter higher input costs, and a voluntary update of their base acres to allow younger growers into the commodity programs.

Redding encouraged farmers to support political action committees (PAC) to advocate for ag issues as production agriculture’s power lessens.

“The Southeast doesn’t have a strong reputation for supporting PACs, but as our numbers decline this is going to be an avenue to get a voice,” Redding said. “Support of a PAC is the piece that needs to increase in the Southeast.”

Although 92% of all production agriculture is in Republican districts, support from Democratic lawmakers is vital to pass a farm bill, Redding said, praising Georgia Democrats Sanford Bishop and David Scott for their support of agriculture.

Exports matter

 Georgia exported $3.86 billion worth of agricultural commodities in 2022, Munisamy said, ranking Georgia 18th in the U.S. for ag exports. Cotton, poultry & eggs, peanuts, fruits & vegetables, and tree nuts are the major commodities Georgia exports.

This year, Munisamy expects there could be higher export demand for Georgia poultry products due to population and income growth overseas coupled with limited supplies of beef. 

“Because fruit and vegetables are considered crucial to a balanced diet there is no support in Congress to limit imports and also because Congress is afraid of creating a trade war,” Munisamy said.

China is one of the biggest importers of row crops, especially cotton. How much China imports will depend on their economy and the cost of U.S. commodities on the world market and how much other countries, like Brazil and India, produce. 

“I think we need to keep markets open rather than sanctioning markets,” Munisamy said. “We stopped selling pork to Russia, and they became one of the biggest pork exporters. Finding new markets to replace trade relationships already established is expensive and takes time.”