USDA Revises Farm Income Higher, but Costs Still Bite

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. Because the 2025 revision was larger than the $5 billion upward revision in the 2026 forecast, USDA now projects a steeper decline in farm income from 2025 to 2026. February's forecast anticipated only a 0.7% nominal decline in net farm income and a 2.6% inflation-adjusted decline; September now projects declines of 2.6% and 5.5%, respectively. Overall, USDA's September forecast puts farm income above its February estimate, but the revision does not signal broad financial relief. Federal support is projected to rise nearly 70%, from $28 billion in 2025 to $47 billion in 2026—$2.7 billion higher than February's forecast. This is not all new assistance; USDA records payments when they are received, including support authorized for prior-year losses. Production expenses are now projected more than $15 billion higher, farm debt continues to rise and commodity conditions remain uneven, with stronger crop receipts offset by declines across much of the livestock sector. After inflation, net cash farm income (a slightly narrower measure of profits relative to net farm income) is still expected to fall 2.5% from 2025. A Different Picture than February USDA's September update paints a stronger picture of 2025 than the February projection. For 2025, net farm income is now estimated at about $162.7 billion, up $8.1 billion from the February estimate, while net cash farm income was revised nearly $22 billion higher, from $153.9 billion to about $175.7 billion. The largest change came from livestock markets. USDA now estimates 2025 animal and animal product receipts at roughly $303.6 billion, nearly $13 billion above its February estimate, while crop receipts changed little. Production expenses were revised slightly lower, from $473.1 billion to $471.6 billion, and direct government payments were revised down from $30.5 billion to $27.9 billion. Taken together, the revisions suggest that stronger realized market receipts, particularly from livestock, help explain much of the improvement in USDA's estimate of 2025 farm income, rather than a broad easing in production costs or greater government support. Read more here: https://www.fb.org/intel/markets/usda-revises-farm-income-higher-but-costs-still-bite