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THURSDAY, SEPTEMBER 3, 2026   |   SPECIAL REPORT & ANALYSIS

SPECIAL REPORT & ANALYSIS  |  USDA FARM INCOME FORECAST

U.S. 2026 Farm Income Falls Despite Record $47.4 Billion in Government Payments

Higher crop receipts meet surging costs as farm debt tops $600 billion

Analysis  ·  September 3, 2026

U.S. net farm income is forecast to decline in 2026 despite a major improvement in crop receipts and what would be a record $47.4 billion in direct government payments, underscoring how rapidly higher production costs are consuming the additional revenue flowing into agriculture.

USDA’s Economic Research Service (ERS), in its Sept. 3 farm income update, forecasts net farm income at $158.4 billion in 2026, down $4.3 billion, or 2.6%, from 2025. The decline becomes substantially larger after inflation: real net farm income falls $9.1 billion, or 5.5%.

Net cash farm income tells a similar story. USDA forecasts it at $176.4 billion, up just $700 million, or 0.4%, in nominal dollars, but down $4.6 billion, or 2.5%, after inflation. Both net farm income and net cash farm income would remain above their inflation-adjusted 2006-25 averages.

The distinction is important. Net farm income is USDA’s broad measure of farm-sector profitability and includes noncash adjustments such as inventory changes and depreciation. Net cash farm income focuses on cash receipts and other farm-related cash income — including government payments — minus cash expenses.

The headline numbers therefore suggest stability. The details show considerably more financial stress.

September Forecast Is Much Different from February

USDA’s September numbers are dramatically higher than its February forecast, but that should not be interpreted simply as an improvement in farm profitability. In February, USDA expected 2026 net farm income of $153.4 billion and net cash farm income of $158.5 billion. It forecast total cash receipts of $514.7 billion, crop receipts of $240.8 billion, direct government payments of $44.3 billion and production expenses of $477.7 billion.

USDA now sees:

• Net farm income: $158.4 billion, $5.0 billion above the February forecast.

• Net cash farm income: $176.4 billion, $17.9 billion higher.

• Total cash receipts: $540.3 billion, $25.6 billion higher.

• Crop receipts: $253.0 billion, $12.2 billion higher.

• Animal and animal-product receipts: $287.3 billion, roughly $13.4 billion higher.

• Government payments: $47.4 billion, $3.1 billion higher.

But there is a major offset: production expenses are now forecast at $492.8 billion — $15.1 billion above the February projection. That revision is one of the most important developments in the report. The farm economy is bringing in considerably more money than USDA expected seven months ago, but it also costs considerably more to operate a farm than USDA expected.

Table 1. USDA’s 2026 farm income forecast: February versus September. Source: USDA Economic Research Service.

Crop Receipts Stage a Significant Recovery

The crop sector represents one of the clearest improvements. USDA forecasts crop cash receipts at $253.0 billion, up $14.6 billion, or 6.1%, from 2025. After inflation, the increase is still $7.5 billion, or 3.1%.

The gains are concentrated in several major commodities.

Corn receipts are forecast to increase $6.8 billion, or 11.3%, largely because of larger quantities sold.

Soybean receipts rise $4.3 billion, or 10.0%, primarily because USDA expects higher prices.

Cotton receipts increase $700 million, or 12.5%, while vegetable and melon receipts jump $3.8 billion, or 15.0%.

Wheat receipts, however, are still forecast to decline $300 million, or 2.5%, while rice receipts drop 19.6%. Sugarbeet and sugarcane receipts also decline sharply.

Figure 1. Change in 2026 crop cash receipts from 2025, by commodity. Source: USDA Economic Research Service.

USDA’s farm business projections show just how dramatically the crop outlook has changed. Average net cash farm income for farm businesses specializing in wheat is forecast to rise 189%, corn 46%, soybeans 44% and cotton 24%. Specialty crop businesses are the exception, with average income down 3%.

For corn operations, USDA projects average net cash farm income of $306,100, up $96,000 from 2025. Wheat businesses rise to $125,300 and soybean businesses to $112,000.

Table 2. Average net cash farm income by farm business specialization, 2026 forecast. Source: USDA Economic Research Service. Dashes indicate a percentage change USDA reported without a dollar average.

Those increases should be interpreted carefully because net cash income includes government payments. They do not mean crop production margins have suddenly returned to unusually profitable levels on market revenue alone.

Livestock Headline Is Distorted by Egg Collapse

Animal and animal-product receipts are forecast to fall $16.4 billion, or 5.4%, to $287.3 billion after reaching a record in 2025. But the decline is heavily concentrated in eggs.

Chicken egg receipts are expected to plunge $20.9 billion, or 66.3%, as egg prices retreat sharply from their exceptional 2025 levels. Since the decline in egg receipts is larger than the entire $16.4 billion reduction in animal-sector receipts, animal receipts excluding eggs would actually increase by roughly $4.5 billion.

Figure 2. Animal and animal-product cash receipts: the egg collapse masks a gain everywhere else. Source: USDA Economic Research Service.

Cattle are the major positive. USDA forecasts cattle and calf receipts up $7.0 billion, or 5.2%, as cattle prices continue rising. Turkey receipts increase $2.0 billion.

Milk receipts decline $2.1 billion, hog receipts fall $1.2 billion and broiler receipts decline $1.3 billion.

Even record cattle prices, however, do not translate directly into higher profitability for every cattle producer. USDA forecasts average net cash farm income for cattle/calf businesses at $50,300, essentially unchanged from 2025. Dairy farm businesses fall 12%, hog operations decline 10%, and poultry/egg operations move into negative territory at an average minus $3,400.

One reason cattle margins are not improving as rapidly as cattle prices is the extraordinary cost of replacement animals and purchased livestock.

Government Payments Reach Extraordinary Levels

The number that perhaps best captures the condition of the farm economy is $47.4 billion. That is USDA’s forecast for direct government farm payments in 2026, up $19.5 billion, or 69.8%, from $27.9 billion in 2025.

If realized, $47.4 billion would exceed the $45.7 billion record established in 2020, when pandemic programs such as the Coronavirus Food Assistance Program and Paycheck Protection Program drove government assistance to unprecedented levels. It would therefore be a new nominal-dollar record, although not necessarily a record after adjusting previous payments for inflation.

Figure 3. Direct government farm payments, 2020 and 2025 actual versus 2026 forecast. Source: USDA Economic Research Service.

The scale of the increase is revealing. Production expenses are forecast to increase $21.2 billion in 2026. Government payments increase $19.5 billion. Thus, the increase in federal payments is equivalent to roughly 92% of the entire increase in farm production expenses.

Figure 4. The increase in direct government payments equals 92% of the increase in farm production expenses. Source: USDA Economic Research Service.

That helps explain why net cash farm income can remain almost unchanged despite an enormous escalation in operating costs.

Government payments are also equivalent to nearly 30% of projected 2026 net farm income. That does not mean 30% of every farmer’s profit comes from the government — payment eligibility and distribution vary considerably — but it illustrates how important federal assistance has become to the aggregate farm-income calculation.

Emergency Assistance Still Does Most of the Heavy Lifting

The composition of the $47.4 billion is also significant.

USDA forecasts supplemental and ad hoc disaster assistance at $26.5 billion, up $5.3 billion, or 24.9%, from 2025. The total consists primarily of the Farmer Bridge Assistance Program authorized under the Commodity Credit Corporation Charter Act and supplemental disaster assistance provided through the American Relief Act of 2025.

Farm Bill commodity programs are becoming substantially more important as well.

Payments tied to commodity prices or revenue are forecast at $15.6 billion, up $13.4 billion from 2025, largely because of changes to Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) for the 2025 crop year enacted through the One Big Beautiful Bill Act. Dairy Margin Coverage payments rise to nearly $170 million.

Conservation payments increase nearly $758 million, or 16.9%, to $5.3 billion.

Figure 5. Composition of the $47.4 billion in forecast 2026 direct government payments. Source: USDA Economic Research Service.

The policy significance is substantial. The traditional commodity safety net is starting to provide considerably more support, but more than half of all projected government payments still come from supplemental and ad hoc assistance.

That suggests permanent farm programs have not yet eliminated agriculture’s reliance on Congress and administrations repeatedly constructing temporary aid packages during periods of financial stress.

Production Costs Are the Biggest Warning Sign

USDA now forecasts total farm production expenses at $492.8 billion, up $21.2 billion, or 4.5%, from $471.6 billion in 2025. Even after inflation, expenses increase $7.1 billion, or 1.5%. The February forecast looked completely different. USDA then expected expenses to rise only $4.6 billion to $477.7 billion.

The September forecast is therefore $15.1 billion higher than USDA anticipated in February.

Three categories account for most of the increase.

Livestock and poultry purchases rise $7.4 billion, or 11.4%, to $71.9 billion.

Fertilizer, lime and soil-conditioner expenses increase $5.3 billion, or 15.3%.

Fuel and oil expenses surge $4.8 billion, or 28.8%.

Combined, those three categories increase by $17.5 billion, accounting for more than four-fifths of the overall increase in farm expenses.

Figure 6. Largest increases and decreases in 2026 farm production expenses. Source: USDA Economic Research Service.

The livestock number is especially notable. Purchased livestock and poultry will surpass feed for the first time to become agriculture’s single largest production-expense category. Feed expenses are forecast at $69.5 billion, down 2.1%.

There is some other relief. Pesticide expenses fall $1.4 billion, or 6.6%, while cash labor costs ease slightly. But those reductions are overwhelmed by fertilizer, fuel and livestock costs.

The result is a familiar but increasingly severe cost/price squeeze: farmers can generate substantially more gross revenue without achieving comparable improvement in bottom-line profitability.

Working Capital Improves, But the Context Matters

There is one apparent positive on farm-sector liquidity: working capital is forecast to increase 3.5% in 2026. But that follows a 15.0% decline in 2025.

That distinction is critical.

Working capital is the pool of short-term financial resources available after current liabilities are covered. It helps producers finance seed, fertilizer, fuel, rent, repairs and other operating expenses without having to add additional debt. A modest increase following a 15% decline does not mean farm liquidity has returned to comfortable levels. It means the deterioration may be slowing after a substantial drawdown in the financial cushion available to producers.

USDA itself notes that while working capital improves, other liquidity measures, including the debt-service ratio, worsen in 2026. That is a more cautionary signal than the working-capital headline alone suggests.

Farm Debt Crosses $600 Billion

The farm balance sheet remains strong in absolute terms, but its direction is deteriorating. USDA forecasts total farm-sector debt at $605.1 billion in 2026, up $26.4 billion, or 4.6%. It marks the first time farm debt has moved above $600 billion.

Real estate debt is forecast at $399.0 billion, up 4.6%, while non-real-estate debt rises 4.4% to $206.1 billion. Both categories also rise after adjusting for inflation.

Figure 7. Farm-sector debt and leverage, 2025 versus 2026 forecast. Source: USDA Economic Research Service.

Farm assets remain enormous at $4.47 trillion, while sector equity reaches $3.86 trillion. Real estate alone accounts for $3.72 trillion, or about 83% of farm-sector assets.

That land base is a critical reason today’s situation is not comparable with the 1980s farm financial crisis.

But debt is rising more rapidly than assets or equity. USDA consequently forecasts the debt-to-asset ratio increasing from 13.34% in 2025 to 13.54% in 2026 and explicitly says farm-sector solvency will worsen.

The distinction between solvency and liquidity is essential.

U.S. agriculture remains highly solvent because farmers collectively own trillions of dollars of land and other assets. But a producer can have substantial equity in farmland while simultaneously struggling to generate enough cash to finance the next crop, service operating debt and cover family living expenses.

That appears to be where an increasing share of the stress is developing.

Aggregate Income Masks Enormous Differences

USDA’s national farm-income figures also should not be confused with the experience of the typical producer.

Average net cash farm income for USDA-defined farm businesses is forecast to rise 7.1% to $121,700 in 2026, but results differ sharply by commodity and geography. Farm businesses account for about half of U.S. farms but more than 90% of agricultural production.

Six of USDA’s nine Farm Resource Regions are expected to record higher average cash income. The Northern Great Plains posts the largest increase, up 30% to $217,000 per farm business — largely because of higher government payments.

Meanwhile, USDA’s household statistics provide an important reality check. Median farm income earned by farm households is forecast at minus $467 in 2026, while median off-farm income is nearly $94,000. Median total farm-household income reaches $108,460.

That illustrates why the $158.4 billion net farm income figure should never be interpreted as suggesting that the typical U.S. farmer is earning exceptionally large profits.

Analysis: Farm Economy Is Stable, But Increasingly Policy-Dependent

The Sept. 3 USDA report does not describe an agriculture sector in systemic crisis. The balance sheet remains exceptionally strong. Farmland values provide enormous collateral. Farm equity approaches $3.9 trillion. Crop receipts are improving, cattle prices remain historically strong, and overall net farm income remains above its 20-year inflation-adjusted average.

But the report does show a farm economy becoming increasingly dependent on government assistance to bridge the gap between market revenue and rapidly rising costs.

That is the central policy issue.

USDA expects a $14.6 billion increase in crop receipts and a $19.5 billion increase in government payments. Yet net farm income still declines because expenses jump $21.2 billion, livestock-sector receipts fall and inflation further erodes purchasing power. Without the extraordinary increase in government payments, the aggregate farm-income picture would be substantially weaker.

The assistance is doing what lawmakers intended: cushioning producers against adverse prices, revenue losses, disasters and higher costs. But the need for nearly $47.4 billion in direct federal payments also indicates that market returns alone are not presently sufficient to keep a significant portion of agriculture financially whole.

That is particularly important as Congress and the administration turn toward the next phase of agricultural legislation — effectively Farm Bill 2.0.

The changes to ARC and PLC are already beginning to provide considerably more assistance. The challenge is whether lawmakers can construct a more predictable permanent safety net that responds rapidly enough to changing costs and revenues to reduce the need for repeated multibillion-dollar emergency aid packages.

Bottom Line

USDA’s September forecast is better described as a report on financial resilience under pressure than as evidence of either a farm boom or a broad farm crisis.

Crop receipts have improved markedly. Cattle revenues remain strong. Farm assets and equity provide formidable protection against a widespread solvency crisis.

But real net farm income is falling 5.5%, farm production expenses are rising $21.2 billion, working capital has only begun recovering from a 15% drop, debt has crossed $600 billion and leverage measures are deteriorating.

Above all, USDA forecasts $47.4 billion in direct government payments — potentially the largest nominal amount ever recorded. That may be the most important number in the entire report.

The farm sector remains financially solvent, but the government’s safety net is doing an extraordinary amount of work to keep it that way while producers contend with sharply higher fertilizer, energy, livestock and financing costs.

The immediate risk is therefore not a repeat of the 1980s. It is a continuing erosion of liquidity, margins and borrowing capacity among the most exposed producers — a trend that could become considerably more serious if government assistance retreats before commodity margins recover.

AG POLICY & MARKETS DAILY   |   SPECIAL REPORT & ANALYSIS  |  USDA FARM INCOME FORECAST — THURSDAY, SEPTEMBER 3, 2026