.png)
2024 at a Glance
Kansas agriculture weathered significant challenges in 2024, with net farm income experiencing a notable decline to $4.69 billion – a decrease of $1.24 billion from 2023's peak levels. While still representing the third-highest income level since 2013, this decline reflects the complex landscape our farmers navigated throughout the year.
Most notably, our grain farmers faced declining commodity prices, driven by several factors including expanded cropland acreage in Brazil and Argentina, large U.S. stockpiles, and ongoing trade tensions with China. While crop prices fell, input costs remained stubbornly high, creating a challenging profit margin scenario for many operations. The bright spot came from the livestock sector, where cattle and calves receipts increased by 10% due to strong market prices.
Tax Strategy
As we close out 2024, several key tax considerations deserve attention. The year brought some positive changes, including widened marginal tax brackets and increased standard deductions ($29,200 for married filing jointly, $14,600 for single filers). For farm operations, particularly noteworthy is the 60% bonus depreciation available on new and used assets, though this will step down to 40% in 2025.
Key opportunities for Kansas farmers include:
Maximizing benefits before potential 2025 sunsets of crucial provisions
Utilizing farm income averaging to optimize tax brackets
Taking advantage of increased Section 179 depreciation limits ($1,220,000)
Considering retirement and HSA contribution limit increases
Farm Bill Update
The delay in passing a new Farm Bill created significant uncertainty throughout 2024. The Senate Agriculture Committee introduced the Rural Prosperity and Food Security Act, which includes crucial provisions for Kansas farmers, including enhanced disaster assistance, new support for small and family farms, and raised reference prices for covered crops. However, as the year ends, a one-year extension appears most likely, with potential disaster assistance through the proposed FARM Act offering some hope for additional support.
2025 Predictions
Looking ahead to 2025, several key factors will shape Kansas agriculture:
Commodity Markets: Forecasts suggest continued pressure on grain prices due to global competition and large stockpiles. However, livestock markets, particularly cattle, may continue to provide some stability.
Land Values: After significant increases in recent years, agricultural land values may face pressure from higher interest rates and lower farm profitability. Cash rental rates are expected to begin adjusting to reflect the new economic reality.
Operating Environment: Family farms will need to focus on basic management principles, maintaining working capital, and carefully evaluating machinery and land purchases. With interest rates remaining historically high, refinancing opportunities may be limited compared to recent years.
At Kennedy Berkley, we understand these challenges and stand ready to help our agricultural clients navigate this evolving landscape. Whether you need assistance with Farm Bill programs, succession planning, or general agricultural law matters, our team remains committed to supporting Kansas farmers through these transitional times.
Want to discuss how these changes might affect your operation? Contact us to schedule a consultation and ensure your farm is positioned for success in 2025.