The rate of increase in the nominal (i.e. not adjusted for inflation) cost of US labor has been increasing since 2015. It is higher now than at any time since the late 1980s. Moreover, no long-term upward trend exists in US labor productivity. Caution is thus in order when speculating that the increasing cost of US labor is a temporary event and that artificial intelligence will increase US labor productivity and dampen its cost.

In this farmdoc daily article, we present revisions to the 2024 Crop Budgets for Illinois, highlighting changes from our January release for high-productivity farmland in central Illinois while discussing the more general trends across regions. We have revised corn and soybean prices down, while cost adjustments were mixed. Farmer return projections for corn are improved across regions, while soybean return expectations are improved for southern Illinois but similar or lower for other regions.

Recently, media reports have shown that consumers are frustrated by food manufacturer responses to increased food prices, including ‘shrinkflation’, and ‘skimpflation’. Finding effective ways to manage higher input costs without affecting demand or profit margins is top of mind for many food manufacturers. We utilize results from the Gardner Food and Agricultural Policy Survey to investigate consumer preferences for how a food manufacturer might respond to increased input costs.

Total economic returns in 2023 for Illinois beef feeding enterprises exceeded total costs by $2.04 per 100 pounds of beef produced in preliminary findings for farms enrolled in Illinois Farm Business Farm Management. The 2023 returns were lower than the 2022 total returns above all costs (2022 was the highest since this study began) by $19.73 per 100 pounds produced. Total returns have exceeded total economic costs in five out of the last ten years.

In the fourth quarter of 2023, on average, commercial banks specializing in agricultural lending reported higher Return on Average Assets and were more cost-efficient than non-agricultural banks. However, non-agricultural banks reported a higher average Net Interest Margin (NIM). Within both lending specializations, the average NIM and Efficiency Ratio (ER) decrease as the bank asset size increases. Overall, the banking sector remains resilient in the US.

After record farm incomes in 2021 and 2022, commodity prices have declined while input costs have remained elevated resulting in a margin squeeze and much lower incomes in 2023 and…