USDA’s farm income forecast released this month projects another challenging year ahead for most farmers, except those in the beef sector.
Overall, net farm income, a broad measure of profits, is forecast at $153.4 billion in 2026, a decrease of $1.2 billion relative to 2025 in nominal dollars.
USDA also revised its estimates for 2025 with net farm income projected at $154.6 billion, down $25 billion from the September forecast, while production expenses soared to a record-high $473.1 billion. The farm income forecast was USDA’s first since September following interruptions from the government shutdown last fall.
“Together, these revisions suggest the farm economy is experiencing a generational downturn rather than a temporary slowdown,” American Farm Bureau Federation economists Daniel Munch and Faith Parum noted in a Market Intel report. “Outside of the cattle sector, most commodity markets are weakening.”
USDA forecasted cash crop receipts this year could increase by $2.8 billion. However, after adjusting for inflation, crop receipts are projected to decline by almost 1%, reflecting continued pressure across most crop markets, the AFBF economists noted.
Meanwhile, hog receipts were predicted to decline by almost 1% while milk receipts could fall by $6.2 billion (12.8%) this year, according to the USDA report. The lone bright spot in the projections is cattle and calf receipts, which were projected to increase by $5.2 billion (4.1%) this year as tight supplies support higher prices.
The report revealed other issues in an increasingly fragile farm economy. Farm sector debt is forecast to increase by $30.8 billion (5.2%) to $624.7 billion in 2026. Debt-to-asset levels for the sector are forecast to increase slightly to 13.75% in 2026 while working capital could decrease 9.2% this year compared to 2025.
“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,” Munch and Parum noted. “USDA’s first look at 2026 points to continued pressure in the farm economy.”
USDA did forecast a $13.8 billion increase in direct government payments this year compared to 2025 as a result of the Farmer Bridge Assistance Program.
“Even at these elevated levels, government payments do not fully offset the scale of losses farmers have absorbed in recent years,” the AFBF economists added. “With production costs still high and market prices under pressure, many operations remain below breakeven, even after accounting for disaster and economic assistance, leaving significant financial gaps.”
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