Is Farm Income Going Down in 2025?

Catch up on the latest farm income news and key factors influencing September’s forecast.

Back in February, the USDA released its first farm income forecast for 2025 at $180.1 billion. But with the crop market now facing trade headwinds, the USDA has trimmed September’s farm income forecast to $179.8 billion.

Despite the slight adjustment, farm income is still predicted to increase nearly 40 percent from last year. Even so, concerns around higher production costs and the future of trade markets remain.

In this article, we’ll discuss the key factors shaping these adjustments to the farm income forecast and what strategies you can use to set your farm up for success.

Farm Income is Still on the Rise Despite Crop Market Challenges

After reaching $182 billion in 2022—driven largely by pandemic-era government support—net farm income has been steadily declining as those payments wound down. Early projections suggested 2025 would mark a third straight year of falling farm income, with a modest rebound expected in 2026. However, a substantial increase in farm program funding and a strong livestock market contributed to this rebound coming earlier than expected.

Although the U.S. crop market is facing its own challenges, total net farm income is predicted to be $48.8 billion more than in 2024. While this provides short-term relief for farmers facing tighter margins, it also underscores the sector’s volatility.

To ensure long-term stability, farmers must prioritize what they can control.

• Improving efficiency;
• Managing costs; and
• Planning ahead.

Fortunately, they don’t have to do it alone. AgAmerica is here to provide resources and financial support.

Key Factors Influencing Farm Income in 2025

Let’s start by understanding the key elements influencing the farm income forecast update.

1. Government Payments

The primary reason for this significant increase in farm income is a 356 percent increase in direct government payments. The current forecast holds that farmers can still expect $40.5 billion in payments for 2025, a $30.4-billion increase from 2024.

Financial Tip for Farmers: Take advantage of the increase in government payments and take time to research what you qualify for. This surge is mainly attributed to supplemental and ad hoc disaster assistance for farmers approved in late 2024 through the American Relief Act and the Disaster Relief Supplemental Appropriations Act. But even if you don’t qualify for disaster relief, the Big Beautiful Bill was the most significant investment in farm programs since 2002. It provided additional funding to safety net programs like crop insurance, commodity programs, conservation, and more.

2. Commodity Prices

This is a tale of two cities, largely dependent on what commodities you produce on your operation. Diversified and predominantly livestock-producing operations are better positioned in the current market, while many row crop producers face lower prices and sales.

Crop Commodities

According to the USDA farm income forecast, soybean, corn, and wheat prices are expected to remain low in 2025. Total crop receipts are forecasted to decrease by $6.1 billion (2.5 percent) from 2024 to 2025. Corn receipts are expected to fall by 3.7 percent, soybeans by 7.2 percent, and wheat by 9.8 percent.

“Low grain prices, with elevated input costs, including interest and family living, are contributing to financial hardship.” – Federal Reserve Bank of Kansas City

Fruit and nuts are the exception, forecast to increase 6.5 percent due to higher prices and quantities.

Livestock Commodities

On the other hand, the U.S. livestock sector forecast shows much more optimistic numbers due to lower herd sizes, higher prices, and sustained demand. The numbers remained the same as February’s farm income forecast, with total animal and animal product receipts projected to increase by $30.0 billion (11.2 percent) in 2025. Cattle and calves receipts are expected to increase 15.7 percent, hog receipts 9.5 percent, and chicken eggs 35.4 percent.

Milk receipts are an exception, forecast to fall by $0.5 billion (1.0%).

Financial Tip for Farmers: Diversified farms can often weather market fluctuations better than those that focus only on one crop.

“The strong cattle market is supporting diversified farmers and keeping them afloat. Farmers with mostly wheat are struggling mostly due to very low commodity prices and constant increasing of input costs.”  – Federal Reserve Bank of Kansas City

There are many ways to diversify your income stream that are unrelated to livestock, like agritourism or taking advantage of your vertical with shops, farm stands, or processing.

3. Input Costs and Production Expenses

Total production expenses are forecast to increase 2.6 percent from 2024 to 2025. Since 2018, production costs for farmers have increased by more than 36 percent. Spending on livestock and poultry purchases will see the most significant increase relative to 2024 at $10.6 billion (21.5 percent). Labor expenses are also forecast to rise by $2.2 billion (4.2 percent).

Fortunately, some cost categories, including spending on feed, pesticides, and fuel, are expected to decline from 2024.

Financial Tip for Farmers: Review input costs closely and cut the fat. Take advantage of expected feed, fuel, and pesticide declines while carefully budgeting for higher livestock and labor expenses. Stress test your balance sheet to ensure margins stay strong. Negotiate bulk pricing, long-term supplier contracts, or cooperative purchasing agreements to stabilize costs if possible. Discuss liquidity concerns with your lender sooner rather than later to restructure debt and secure working capital if needed.

4. Farm Debt

Farm debt has been climbing for several years, and with rising interest rates, it’s more difficult (and more expensive) to obtain and manage. Farmers are expected to owe about $592 billion in 2025, or five percent more than in 2024.

The good news is that farm asset values are also going up. The overall value of farm assets (like land, equipment, and livestock) is forecast to reach $4.42 trillion in 2025, which is nearly five percent higher than last year as well. Most of this wealth comes from farmland, which makes up more than 80 percent of all farm assets. Since assets and equity are rising about as fast as debt, the landowner’s overall ability to cover what they owe (solvency) should stay relatively stable.

Financial Tip for Farmers: This balance depends heavily on land values. As one analyst from Kansas State University put it, the growing debt has been “hidden by the fact that land values have outpaced it.” If land prices were to drop sharply, as they did in the early 1980s, debt-to-asset ratios could quickly look much worse. Managing your debt carefully is crucial to avoid overleveraging, especially against land. Focus new borrowing on investments that boost efficiency or income potential and build liquidity.

5. Interest Rates

Farm loan interest rates have risen since the Federal Reserve began increasing rates in 2022 to fight inflation. As a result, borrowing costs for farmers have climbed sharply. Although average rates on farm real estate and operating loans are slightly lower than in 2024, they remain more than 125 basis points higher than the 20-year average. Several rate cuts are expected before the end of 2025. That, combined with a historic investment in farm program funding going into effect, should support farm income further in 2026.

Financial Tip for Farmers: Young and beginning farmers are hit hardest by the current farm economy. Additionally, farmers who rent their land may also have less flexibility in improving their working capital. The important thing is to understand your debt-to-asset ratio and how to manage it. Farmers with good ratios generally get access to more favorable loan rates.

Standing with Farmers Through Every Season

At AgAmerica, we know farming isn’t just a livelihood—it’s a legacy. That’s why we provide flexible land loan solutions designed to adapt to changing markets and keep operations moving forward. Our agricultural lending experts are here to help you manage uncertainty, protect your business, and seize new opportunities.

Be proactive, don’t let shifting commodity prices and production expenses put your operation at risk. Learn how a customized land loan from AgAmerica can give you the stability and flexibility you need.