USDA Projects Lower U.S. Farm Income For 2026

In February, USDA released the latest “USDA Farm Income Forecast”, which appears to show some concern regarding prospects for 2026 U.S. farm income. As you “drill deeper” into the latest USDA data, there are some reasons for even greater concern in certain segments of the agriculture economy. USDA latest update reduced the estimated 2025 U.S. net farm income by $25 billion from the farm income estimate in September, 2025, and projected an even lower net farm income for 2026. The USDA report also highlighted the continued increase in production expenses in agriculture, and the relatively high level of government payments. In should be noted that this report was released prior to the added farm economic concerns related to current war in Iran.
According to the latest U.S. farm income report that was released by the USDA Economic Research Service (ERS) in early February, the 2025 U.S. net farm income is estimated at $154.6 billion, which is down about $25 billion from the September estimate. The recent USDA summary lowers the projected 2026 U.S.net farm income downward an additional $1.2 billion to an estimated $153.4 billion. The record U.S. net farm income was $186 billion in 2022, with the record farm income being largely due to high crop commodity prices, modest crop expenses, and very strong crop profit margins. The projected 2025 and 2026 net farm income is mainly due to profitability of livestock production and large levels of government farm program payments.
In the recent farm income report, USDA revised the estimated total U.S. net cash income for 2025 downward to $153.9 billion, which is a decrease of nearly $27 billion from the September projection. The 2026 net cash income projected to increase slightly to $158.5 billion. Net cash income includes cash receipts from all farm-related income, including government payments, minus cash expenses for the year. Net farm income is accrual-based, which includes adjustments in the cash income for changes in inventories, depreciation, and rental income. Generally, net farm income is usually a more true measure of overall profitability in the farm sector.
Following are some observations from the latest USDA Farm Income Report:
• Overall, 2025 cash receipts for all commodities on U.S. farms is now estimated at near $529 billion, which is expected to decline slightly to $514.7 billion in 2026.
• Total 2026 crop receipts are estimated at nearly $240.6 billion, which is slightly above 2025 levels. Following are the estimated 2026 cash receipts for various crops, compared to 2025 and 2024 receipt levels:
Corn = $63.7 billion (2026); $61.6 B (2025); $66.4 B (2024)
Soybeans = $44.5 billion (2026); $44.5 B (2025); $46.3 B (2024)
Wheat = $9.5 billion (2026); $9.86 B (2025); $11.2 B (2024)
Cotton = $5.4 billion (2026); $5.4 B (2025); $5.2 B (2024)
Fruits & Nuts = $33.4 billion (2026); $33.0 B (2025); $31.3 B (2024)
Vegetables & Melons = $26.2 billion (2026); $25.5 B (2025); $25.1 B (2024)
• Total 2026 livestock receipts are estimated at nearly $274 billion, which is about $17 billion lower than 2025 levels. Total U.S. livestock receipts in 2026 are expected to surpass total crop receipts for the third straight year (2024-2026), which has not occurred in the past twenty-five years. Following are the estimated 2026 livestock receipts for various livestock, compared to 2025 and 2024 receipt levels:
Cattle & Calves = $133.1 billion (2026); $127.9 B (2025); $112.1 B (2024)
Milk & Dairy Products = $42.5 billion (2026); $48.7 B (2025); $50.7 B (2024)
Hogs = $29.3 billion (2026); $29.5 B (2025); $27.3 B (2024)
Broilers = $45.4 billion (2026); $44.7 B (2025); $45.4 B (2024)
Eggs = $8.9 billion (2026); $26.2 B (2025); $21.0 B (2024)
• The significance of government payments on net farm income and net cash income levels increased dramatically in 2025, and is expected to increase even more in 2026.This is largely due to a combination of one-time 2024 economic assistance payments (ECAP) and 2025 Farmer Bridge Assistance (FBA) payments, and the 2023 and 2024 disaster assistance payments (SDRP I & II). Regular farm program payments (PLC & ARC-CO) are also expected to be higher in 2025 and 2026 in some sectors, due the enhancements in the Title I provisions that were included in the “One Big Beautiful Act” (OBBA) that was enacted by Congress in 2025. There are also regular CRP payments, dairy margin coverage payments, and other traditional government payments. Following is listing of the Net Farm Income (NFI) for 2020-2026, and the total amount of estimated government payments (GP) for 2020-2026 (along with the % of the total net farm income from government payments):
2026 = $153.4 billion NFI, $44.3 billion (GP), (28.9% from GP)
2025 = $154,6 billion NFI, $30.5 billion (GP), (19.7% from GP)
2024 = $128 billion NFI, $11 billion (GP), (8.5%from GP)
2023 = $156 billion NFI, $12 billion (GP), (7.7% from GP)
2022 = $186 billion NFI, $16 billion (GP), (8.6% from GP)
2021 = $142 billion NFI, $26 billion (GP), (18.3% from GP)
2020 = $96 billion NFI, $46 billion (GP), (47.9% from GP)
• Total farm expenses are estimated at $477.6 billion in 2026, which is an increase $3.5 billion from 2025, and is $20 billion above 2024 expense levels. The projected 2026 total farm expense level is over 30 percent above the total expense level in 2020. The cost of purchased livestock, especially feeder cattle, is expected to see the greatest increase in 2026. Other farm expenses expected to increase in 2026 include fertilizer, labor, repairs, and property taxes. Seed, pesticides, and land rent are expected to stay fairly steady with a year earlier, while the cost of feed, fuel, and interest are expected to decline slightly in 2026. The continued higher level of crop input costs, together with lower commodity prices, points to the negative profit margins facing crop producers in 2025 and 2026. On the other hand, the low commodity prices have reduced feed costs, resulting in improved profitability in livestock production.
The U.S. net farm income projections by USDA for 2025 and 2026 probably appear to be better than probably actually exist in many areas of the country. The very high net farm income levels from 2021 to 2023 were primarily driven by some of the highest crop prices in the past decade, along with very manageable farm production expenses and low interest rates. The relatively high projected farm income levels for 2025 and 2026 are largely the result of record cattle prices, strong livestock profitability, and a very high levels of government farm program payments. Many of these government payments are one-time ad-hoc payments. The projected crop receipts for 2025 and 2026 are actually the lowest in recent years and the predicted overall profit margins for crop production this year are the poorest since the 2016-2020 period. The above average corn and soybean yields that existed in several areas of the Upper Midwest in 2025 certainly helped soften the potential negative profit margins for many farm operators in those areas.
There are some certainly some “yellow caution flags” in net farm income and profitability levels revealed in the latest USDA farm income report for the U.S. farm sector as we look ahead to 2026. A big key going forward will be if we see some improvement in crop prices during the next 6-12 months. This will likely depend on the level of U.S. demand and consumption, as well as the strength of U.S. export markets to China, Mexico, Canada, and other countries. Another key to farm profitability in 2026 will be what impact the war in Iran and potential tariffs have on farm production expenses, as well as the future direction of land costs, and interest rates during the coming year. In addition, final 2026 farm income and profitability will likely depend on the amount of ad-hoc short-term farm program payments, as well as the financial impact provided by the improved “safety-net” provisions in the “One Big Beautiful Act”.
For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Group Phone - (507) 381-7960; E-mail - [email protected]