By Emmy Powell
Communications Specialist
U.S. farm income is expected to decline this year as rising production expenses continue to pressure the farm economy.
The U.S. Department of Agriculture (USDA) forecasts net farm income at $158.4 billion in 2026. That’s down $4.3 billion, or 2.6%, from 2025.
After adjusting for inflation, net farm income is expected to decline 5.5%, according to American Farm Bureau Federation (AFBF) economists.
USDA raised its 2026 forecast by $5 billion from its February estimate. But the improved outlook comes as farmers face higher costs for fuel, fertilizer, livestock and other production expenses.
Total farm production expenses are now forecast at $492.8 billion for 2026. That’s $21.2 billion higher than last year and $15.1 billion higher than USDA projected in February. The latest forecast also shows significant differences among commodities. Crop cash receipts are expected to increase, while overall livestock receipts are projected to decline from 2025 levels.
Crop sector
Crop cash receipts are projected to reach $253 billion in 2026, up $14.6 billion, or 6.1%, from 2025.
Corn receipts are projected to increase more than 11% to $67.3 billion. Soybean receipts are expected to increase 10% to $47.9 billion, and cotton receipts are projected to increase 12.5% to $5.9 billion.
The outlook, however, is weaker for some crops.
Rice receipts are forecast to fall 19.6% to $2.3 billion, and fruit and nut receipts are expected to decline slightly.
Higher crop receipts also come as fertilizer, fuel and other expenses increase, which limits improvements in farm margins.
Livestock sector
Livestock receipts are expected to decline from strong 2025 levels despite an improved forecast since February.
USDA projects animal and animal product cash receipts will total $287.3 billion in 2026. That’s down $16.4 billion, or 5.4%, from 2025.
Cattle and calf receipts remain a bright spot. They are forecast to increase 5.2% to $140.7 billion. Historically tight cattle supplies continue to support prices.
Receipts are expected to decline for dairy, hogs, broilers and eggs.
Egg receipts are projected to fall 66.3% to $10.6 billion. Milk receipts are expected to decline 4.3%, and hog receipts are forecast to fall 4%.
Production expenses
Several major production expenses increased significantly from USDA’s February forecast.
Fuel and oil expenses are now projected at $21.6 billion, a 28.8% increase from the earlier forecast. Fertilizer, lime and soil conditioner expenses increased 15.3% to $39.6 billion.
Livestock and poultry purchases are projected at $71.9 billion, up 11.4% from USDA’s February forecast.
Marketing, storage and transportation expenses are forecast to increase about 12% from the February estimate. Property taxes and fees are up 4.8%, and interest expenses increased 2.8%.
Farm finances
Government payments are expected to provide additional support to farm income this year.
Direct government payments are forecast at $47.4 billion in 2026, an increase of nearly 70% from about $28 billion in 2025.
Farm debt also continues to climb.
USDA projects total farm sector debt will reach a record $605.1 billion in 2026. That’s an increase of $26.4 billion, or 4.6%, from last year.
Credit is commonly used in agriculture to cover production expenses before farmers receive income from crops or livestock.
“Using credit doesn’t mean necessarily that the farm or the farm economy is in bad financial health, but something we do look at is the amount of debt farms are taking on,” AFBF Economist Faith Parum said.
Borrowing costs are also increasing. USDA estimates inflation-adjusted interest expenses will reach their highest level on record in 2026.
Economic reports
The September report is one of three farm income reports released by USDA. The first was released in February, and the final report will be released in December.
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