Higher costs and lower livestock receipts pressure farm earnings
The financial outlook for U.S. agriculture shows a mixed picture for 2026. While crop producers are expected to benefit from stronger commodity markets and increased government support, overall farm profitability is forecast to decline as production costs continue to rise and livestock revenues weaken.
Net farm income, one of the broadest measures of farm profitability, is projected to reach $158.4 billion in 2026. This represents a decline from 2025 levels. Net cash farm income is forecast at $176.4 billion, showing little change from the previous year. Even with this decline, both measures are expected to remain above long-term averages.
One of the main reasons for lower farm income is a projected decrease in total cash receipts. Farm cash receipts are expected to reach $540.3 billion in 2026, slightly below 2025 levels. Stronger crop sales will not be enough to fully offset declines in animal and animal product revenues.
Crop production is forecast to be a bright spot for the farm sector. Total crop cash receipts are expected to rise to $253 billion, supported by stronger returns from corn, soybeans, cotton, and vegetables. Corn receipts are projected to increase because of larger sales volumes, while soybean receipts are expected to benefit from improved prices.
Vegetable and melon producers are also expected to experience stronger revenue due to higher market prices. Cotton receipts are forecast to increase as well. However, not all crops are expected to perform well. Rice, wheat, sugarbeets, and sugarcane are projected to see lower receipts because of weaker sales or reduced market returns.
The livestock sector is facing a more challenging year. Total animal and animal product receipts are projected to decline to $287.3 billion. The largest factor behind the decline is a significant reduction in chicken egg receipts as egg prices are expected to drop sharply from recent highs.
Milk receipts are forecast to decrease because of lower prices, while hog producers are also expected to see lower revenues. Broiler receipts are expected to edge lower as well. One exception is the cattle sector, where strong market prices are expected to push cattle and calf receipts higher. Turkey producers are also forecast to benefit from improved pricing.
Government support payments are expected to play a larger role in farm finances during 2026. Direct government payments are projected to increase substantially, reaching $47.4 billion. Higher commodity program payments, disaster assistance programs, and conservation funding are expected to contribute to the increase.
Supplemental disaster assistance is forecast to remain elevated, providing support to producers affected by adverse weather and other challenges. Payments linked to commodity programs are also expected to rise because of market-based triggers tied to prices and revenues.
At the same time, production expenses are expected to continue climbing. Total farm production expenses are forecast to reach $492.8 billion in 2026. Higher spending on livestock and poultry purchases, fertilizer, soil conditioners, fuel, and oils are expected to account for much of the increase.
Livestock and poultry purchases are projected to become the largest farm expense category, surpassing feed costs for the first time. Fertilizer and fuel expenses are also expected to rise significantly, adding pressure to farm margins.
Some costs are expected to decline. Feed expenses are forecast to move lower, while spending on pesticides and agricultural chemicals is expected to decrease. Cash labor costs are projected to remain relatively stable, although inflation-adjusted figures suggest a more noticeable decline.
Overall, the 2026 outlook highlights the challenges facing U.S. farmers and ranchers. Increased crop revenues and stronger government support provide some relief, but rising expenses and weaker livestock markets are expected to limit profitability. Producers will continue to balance opportunities in crop markets with growing cost pressures as they plan for the year ahead.
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