By Faith Parum, Ph.D. and Daniel Munch
Key Takeaways
- USDA raised its 2026 net farm income forecast by $5 billion from February to $158.4 billion, and its estimate of 2025 income even more. As a result, net farm income is now expected to fall 2.6% in nominal terms and 5.5% after inflation in 2026.
- The expense outlook has deteriorated significantly. USDA raised its 2026 production expense forecast by $15.1 billion since February to $492.8 billion. Fuel and oil expenses are now projected to jump 28.8%, fertilizer expenses are up 15.3% and livestock purchases are up 11.4% from their earlier forecast.
- Direct government payments, including ad hoc and traditional farm bill program payments, are forecast to reach $47.4 billion in 2026, up nearly 70% from 2025. Those payments provide critical support, but their size also illustrates the continued gap between market returns and the cost of producing food, fiber and fuel.
USDA’s September 2026 net farm income forecast, released Sept. 3, projects that net farm income, a broad measure of farm sector profitability, will decline to $158.4 billion in 2026. That is $4.3 billion, or 2.6%, below the newly revised 2025 estimate of approximately $162.7 billion. After adjusting for inflation, the decline becomes considerably larger at $9.1 billion, or 5.5%.
At first glance, the new forecast looks better than USDA’s February outlook, which placed 2026 net farm income at $153.4 billion. However, the comparison is more complicated. USDA also raised its estimate for 2025 by $8.1 billion, from $154.6 billion to $162.7 billion.
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