By Daniel Munch and Faith Parum
Key Takeaways
- USDA projects net farm income will slip lower in 2026 and remain roughly $48 billion (24%) below the record highs reached in 2022, underscoring a generational downturn in the farm economy.
- Strength in the beef market masks broader financial weakness across most commodity sectors.
- USDA’s latest update dramatically rewrites the 2025 story, cutting net farm income by roughly $25 billion from last fall and revealing a much weaker rebound.
- Production expenses continue to climb to record highs while low commodity prices strain farm finances, and rising debt levels leave farmers unable to absorb ongoing losses.
Revisions to 2025
USDA’s latest farm income forecast delivers the first estimates for 2026 while also significantly revising its outlook for 2025. Because USDA did not release its customary December farm income update, this February report marks the first update since September, and the changes are substantial. USDA now estimates that 2025 net farm income totaled about $154.6 billion, down roughly $25 billion from the $179.8 billion forecast in September. Net cash farm income for 2025 was similarly revised down to about $153.9 billion, nearly $27 billion below the $180.7 billion previously projected.
At the same time, USDA revised 2025 production expenses higher, to $473.1 billion, while adjusting direct government payments lower, to about $30.5 billion, roughly $10 billion below earlier expectations. Together, these revisions suggest the farm economy is experiencing a generational downturn rather than a temporary slowdown. Outside of the cattle sector, most commodity markets are weakening. The updated forecast further cements that the expectations of a strong income rebound for 2025 did not come to fruition and this reinforces that farm profitability last year was more fragile than previously believed.
First Look at 2026
Against that backdrop, USDA’s first look at 2026 points to continued pressure in the farm economy. Net farm income is forecast at $153.4 billion in 2026, down $1.2 billion from 2025 in nominal terms, while net cash farm income is projected to rise modestly to $158.5 billion. Despite remaining above long-run averages, the 2026 outlook continues to reflect declining market-based receipts and an ongoing reliance on government support.
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