The 2026 Farm Economy: USDA's Farm Income Forecast and What It Means for Farm Loans

Last updated October 2026. Based on USDA's September 3, 2026 farm income forecast.

Farm income is expected to slip in 2026, costs are rising faster than sales, and farm debt keeps climbing. That is the short version of the U.S. Department of Agriculture's latest farm income forecast, released September 3, 2026.

USDA's Economic Research Service (ERS) forecasts net farm income of $158.4 billion for 2026. That is $4.3 billion, or 2.6%, less than in 2025. After adjusting for inflation, the drop is 5.5%. Even so, USDA says 2026 farm income would still be above its 2006–2025 average after inflation (USDA ERS).

This guide explains the numbers in plain language. It covers where farm money is coming from, why costs are up and which states earn the most from farming. It also explains what the 2026 farm economy means if you own farm or ranch land or plan to buy it.

The 2026 Farm Economy at a Glance

Here are USDA's headline forecasts for 2026. Dollar figures are not adjusted for inflation unless we say so.

• Net farm income: $158.4 billion, down 2.6% from 2025 (down 5.5% after inflation).
• Net cash farm income: $176.4 billion, up 0.4% (down 2.5% after inflation).
• Total farm cash receipts (sales): $540.3 billion, down 0.3%.
• Production expenses: $492.8 billion, up $21.2 billion, or 4.5%.
• Direct government payments: $47.4 billion, up $19.5 billion, or about 70%.
• Farm debt: $605.1 billion, up 4.6%. The American Farm Bureau Federation (AFBF) calls this a record.
• Farm real estate assets: $3.72 trillion, about 83% of everything the farm sector owns.

Sources: USDA ERS Farm Sector Income Forecast and Assets, Debt, and Wealth, both updated September 3, 2026.

What Is Net Farm Income?

Net farm income is USDA's broad measure of farm profits for the whole country. In simple terms, it is gross farm income minus total production expenses.

USDA also tracks net cash farm income. This counts only cash: money from farm sales and other farm-related income, including government payments, minus cash expenses. Net farm income also counts non-cash items, like changes in stored crops and livestock, and wear on equipment (depreciation) (USDA ERS Highlights).

Why have two measures? A farm can have a good year on paper while cash is tight, or the other way around. That difference matters to anyone planning loan payments.

Why the Forecast Improved but the Drop Got Bigger

According to AFBF's comparison of the two reports, USDA expected 2026 net farm income of $153.4 billion back in February 2026. The September forecast raised that by $5 billion, to $158.4 billion.

But USDA also raised its estimate for 2025 by even more: $8.1 billion, from $154.6 billion to $162.7 billion. Because 2025 now looks stronger, the expected decline into 2026 is steeper. February's forecast called for a 0.7% drop. September's calls for 2.6%, or 5.5% after inflation.

Faith Parum, deputy chief economist at the American Farm Bureau Federation (AFBF), and former AFBF economist Daniel Munch say much of the 2025 gain came from higher livestock sales, mainly cattle, not from lower costs or more aid.

Crops Up, Livestock Down: Where Farm Sales Are Coming From

Crop sales are forecast to rise. USDA expects crop cash receipts of $253.0 billion in 2026, up $14.6 billion, or 6.1%.

• Corn: up $6.8 billion (11.3%), mainly because farmers are expected to sell more bushels.
• Soybeans: up $4.3 billion (10.0%), mainly because of higher prices.
• Cotton: up 12.5%.
• Vegetables and melons: up $3.8 billion (15.0%) on higher prices.
• Falling: rice (down 19.6%), wheat (down 2.5%), sugar beets (down 43.9%) and sugarcane (down 17.3%).

Livestock sales are forecast to fall from a record 2025. USDA expects animal and animal product receipts of $287.3 billion, down $16.4 billion, or 5.4%.

• Eggs: down $20.9 billion (66.3%) as egg prices are expected to fall sharply. This is the biggest single reason livestock sales drop.
• Milk: down $2.1 billion (4.3%) on lower prices.
• Hogs: down $1.2 billion (4.0%).
• Broilers (chickens raised for meat): down $1.3 billion (2.8%).
• Cattle and calves: up $7.0 billion (5.2%) as cattle prices keep rising.
• Turkeys: up $2.0 billion (35.1%).

AFBF notes that strong cattle receipts reflect tight supply: years of drought have shrunk the nation's beef cow herd to one of its smallest sizes on record. AFBF also notes that the forecast may not fully capture a recent sharp drop in cattle prices.

Why Farm Costs Are Rising in 2026

USDA forecasts total farm production expenses of $492.8 billion in 2026, up $21.2 billion, or 4.5%, from 2025. According to AFBF, that is $15.1 billion more than USDA expected in February. After inflation, costs are still up 1.5%.

The biggest changes:

• Livestock and poultry purchases: $71.9 billion, up $7.4 billion (11.4%). For the first time, this would pass feed as the single largest farm expense.
• Fertilizer, lime and soil conditioners: up $5.3 billion (15.3%), to $39.6 billion.
• Fuel and oil: up $4.8 billion (28.8%), to $21.6 billion.
• Interest: up about $921 million (2.8%).
• Property taxes and fees: up about $867 million (4.8%).
• Feed: $69.5 billion, down 2.1%.
• Pesticides: down $1.4 billion (6.6%).
• Cash labor: about $44.3 billion, roughly flat.

AFBF's economists also warn that energy, shipping and fertilizer costs could climb higher still. When costs grow faster than sales, the margin between them shrinks. That margin is what pays for living expenses, new equipment and loan payments.

Government Payments Make Up a Bigger Share of Farm Income

USDA forecasts direct government payments of $47.4 billion in 2026, up $19.5 billion (69.8%) from $27.9 billion in 2025. The money comes from three main places:

• Supplemental and ad hoc disaster assistance: $26.5 billion. Most of this comes from the Farmer Bridge Assistance Program (authorized under the Commodity Credit Corporation Charter Act) and Supplemental Disaster Assistance (authorized by the American Relief Act of 2025).
• Farm bill payments tied to prices or revenue: $15.6 billion, up $13.4 billion. USDA says most of the jump comes from changes to two farm bill programs, Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC), for the 2025 crop year. The One Big Beautiful Bill Act (Public Law 119-21) made those changes.
• Conservation payments: $5.3 billion.

By our math, government payments equal about 30% of forecast 2026 net farm income. AFBF points out that not all of it is new money. USDA records payments when farmers receive them, and some of this support covers losses from earlier years.

For a farm planning its finances, the takeaway is simple. Ad hoc payments can help a year's cash flow, but they are not guaranteed to repeat.

Farm Debt Forecast to Reach $605.1 Billion

USDA forecasts total farm sector debt of $605.1 billion in 2026, up $26.4 billion, or 4.6% (USDA ERS).

• Farm real estate debt (loans secured by land): $399.0 billion, up 4.6%.
• Non-real estate debt (all other farm debt): $206.1 billion, up 4.4%.

By our math, real estate debt is about two-thirds of all farm debt.

Farm assets are growing too. USDA expects total farm assets of $4.47 trillion (up 3.0%) and farm real estate worth $3.72 trillion (up 3.4%). Farm equity, or what farms own minus what they owe, is forecast at $3.86 trillion.

Two numbers show how the balance sheet is changing:

• Debt-to-asset ratio: up slightly, from 13.34% in 2025 to 13.54% in 2026. That means about $13.54 of debt for every $100 of farm assets. USDA says farm solvency, or the ability to meet debts when due, is forecast to worsen because debt is growing faster than assets.
• Working capital: up 3.5% in 2026 after falling 15.0% in 2025. Working capital is what is left of cash and other short-term assets after paying debts due within 12 months. But USDA notes that another measure, the debt service ratio, shows liquidity (the ability to turn assets into cash to pay bills due soon) getting worse in 2026.

Top 10 Agricultural States by Gross Farm Income (2025)

USDA's September release also included its first state-level estimates for 2025. John Newton, Ph.D., Vice President of Public Policy and Economic Analysis at AFBF, reviewed them in Reviewing State-Level Farm Income and Production Expenses, also published by Farms.com.

These state figures are for 2025 and are adjusted for inflation, so they differ from the national 2026 forecasts above.

Top 10 states by gross farm income in 2025:

1. California: $72 billion
2. Iowa: $47 billion
3. Texas: $43 billion
4. Nebraska: $41 billion
5. Kansas: $33 billion
6. Minnesota: $29 billion
7. Illinois: $26 billion
8. North Carolina: $20 billion
9. Indiana: $19 billion
10. Wisconsin: $19 billion

These 10 states produced more than half of U.S. gross farm income, which totaled $653 billion in 2025 after inflation, up 5%. Production expenses were just as concentrated: the top 10 states by expenses, led by California, Iowa, Nebraska and Texas, accounted for more than half of U.S. farm costs. Iowa's gross farm income grew 9%, helped by cattle income and more federal support. Texas also rose for the same reasons.

Net farm income was concentrated, too. California led with $26 billion, followed by Texas ($15 billion), Iowa ($10 billion) and Nebraska (more than $8 billion). Those four states earned more than 30% of U.S. net farm income in 2025, and the top 10 earned nearly 60%. Nationally, inflation-adjusted net farm income rose nearly $32 billion, or 23%, to $167 billion in 2025. That is the same year as USDA's $162.7 billion estimate earlier in this article, just measured in 2026 dollars.

See farmland values and financing details for each state on our state guides.

What the 2026 Farm Economy Means for Farm Loans and Land Loans

Here is how these numbers connect to farm and land financing.

Land is the farm sector's biggest asset. Farm real estate makes up about 83% of farm assets, and about two-thirds of farm debt is farm real estate debt. In other words, land is where most of the farm sector's borrowing happens.

Land is only part of the picture. Land value is one part; farm income is another. When costs rise faster than sales, your income deserves extra attention in your own planning. Each lender sets its own standards and makes its own credit decision.

Debt is rising faster than assets. That is a sector-wide trend, not a verdict on any one farm. But it is a good reason to know your own numbers before you talk to a lender.

If you own or plan to buy farm or ranch land, these steps can help you prepare:

1. Update your financial statements. Build a current balance sheet and a cash flow plan for the next 12 months that uses today's costs for fuel, fertilizer, feed and interest. Our guide to preparing financials walks through what to gather.
2. Know your maturity dates. List when each loan comes due and when any large or balloon payments hit.
3. Separate one-time income from regular income. Ad hoc government payments may not repeat. Plan around the income you expect every year.
4. Know your equity. Some owners use land equity for a farm refinance, a land equity loan or an operating line secured by farm real estate. Our guide to refinancing ag debt explains the basics. Whether that is possible is the lender's decision.
5. Do your homework before you buy land. If you plan a farmland purchase, our land purchase due diligence checklist covers what to check first. Our guide to farm real estate loans explains how this type of financing works.

How AgLoans.com Can Help

AgLoans.com is not a bank or lender. We organize your information and work with underwriters who work with Farmer Mac and other private funding sources. The lender makes the credit decision and sets any terms.

We review requests from $500,000 to $25 million secured by agricultural real estate. That includes land purchases, refinances, operating lines, and cattle, dairy, poultry, orchard, vineyard and timber operations. We serve borrowers nationally. AgLoans does not arrange residential mortgages.

Ready to talk through your plans? Start my loan inquiry. There is no credit pull to start.

Frequently Asked Questions About the 2026 Farm Economy

What is the farm income forecast for 2026? USDA forecasts net farm income of $158.4 billion for 2026, down $4.3 billion (2.6%) from 2025. After inflation, that is a 5.5% decline. Net cash farm income is forecast at $176.4 billion, up 0.4% before inflation. USDA released the forecast on September 3, 2026.

Is there a farm crisis in 2026? USDA doesn't use the word "crisis." Its forecast shows net farm income falling 5.5% after inflation, costs rising 4.5% and debt growing. But USDA also says 2026 net farm income would stay above its 2006–2025 average after inflation. Conditions vary a lot by farm, crop and region.

Why are farmers struggling in 2026? Mostly because costs are rising faster than sales. USDA expects production expenses to climb $21.2 billion, led by livestock purchases, fertilizer and fuel. Livestock receipts are forecast to fall 5.4%, mostly because of lower egg prices. AFBF economists say government payments help, but their size shows market returns are falling short of what it costs to produce food, fiber and fuel.

How much do farmers make? It depends on how you measure it. USDA forecasts average net cash farm income of $121,700 per farm business in 2026, up 7.1%. USDA counts a farm as a "farm business" if it has at least $350,000 in gross cash farm income, or if farming is the operator's main job. For all farm households, USDA forecasts median total household income of $108,460 in 2026. Many farm households rely mainly on off-farm income. USDA forecasts median off-farm income of $93,975 and median farm income of –$467, a small loss. These are separate medians, so they don't add up to the total (USDA ERS Highlights).

What are the top 5 agricultural states? By 2025 gross farm income, the top five were California ($72 billion), Iowa ($47 billion), Texas ($43 billion), Nebraska ($41 billion) and Kansas ($33 billion). These are inflation-adjusted USDA estimates reviewed by AFBF. The top 10 states produced more than half of U.S. gross farm income.

How much debt do U.S. farms have? USDA forecasts farm sector debt of $605.1 billion in 2026, up 4.6%. About $399.0 billion is farm real estate debt and $206.1 billion is non-real estate debt. The farm debt-to-asset ratio is forecast at 13.54%.

Why are farm production costs going up in 2026? The biggest increases are livestock and poultry purchases (up 11.4%), fertilizer, lime and soil conditioners (up 15.3%) and fuel and oil (up 28.8%). Interest expenses are up about 2.8%. Feed and pesticide spending are forecast to fall.

How much are farmers getting in government payments in 2026? USDA forecasts $47.4 billion in direct government payments in 2026, up about 70% from 2025. That includes $26.5 billion in supplemental and ad hoc disaster aid, $15.6 billion in farm bill payments tied to prices or revenue, and $5.3 billion in conservation payments. It does not include crop insurance indemnities or USDA loans.

How does the farm economy affect farm loans? When costs rise and margins tighten, preparation matters more: current financial statements, a realistic cash flow plan and a clear picture of your equity. Land value is one part of the picture; income is another. Each lender sets its own standards and makes its own credit decision.

Sources

1. USDA Economic Research Service — Farm Sector Income & Finances: Farm Sector Income Forecast (updated September 3, 2026). https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/farm-sector-income-forecast
2. USDA Economic Research Service — Farm Sector Income & Finances: Assets, Debt, and Wealth (updated September 3, 2026). https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/assets-debt-and-wealth
3. USDA Economic Research Service — Farm Sector Income & Finances: Highlights from the Farm Income Forecast (updated September 3, 2026). https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/highlights-from-the-farm-income-forecast
4. Faith Parum, Ph.D., and Daniel Munch, American Farm Bureau Federation — "USDA Revises Farm Income Higher, but Costs Still Bite," Farm Bureau Market Intel (September 3, 2026). https://www.fb.org/intel/markets/usda-revises-farm-income-higher-but-costs-still-bite
5. John Newton, Ph.D., American Farm Bureau Federation — "Reviewing State-Level Farm Income and Production Expenses," Farm Bureau Market Intel (October 7, 2026). https://www.fb.org/intel/markets/reviewing-state-level-farm-income-and-production-expenses
6. Farms.com — "Reviewing State-Level Farm Income and Production Expenses" by John Newton (October 9, 2026). https://www.farms.com/news/reviewing-state-level-farm-income-and-production-expenses-247975.aspx

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AgLoans.com is not a bank or lender and does not make loans or credit decisions. This article is general educational information only and is not financial, legal, or tax advice. Figures are forecasts and estimates published by USDA and the American Farm Bureau Federation as of the dates noted, and they may be revised. Loan programs, terms, eligibility, and availability are set by individual lenders, vary by borrower, and change over time. Consult a qualified lender, attorney, or tax professional about your specific situation.