U.S. farmers are expected to face tighter profit margins this year as rising production expenses outpace revenue gains in parts of the agricultural sector.
The U.S. Department of Agriculture’s September forecast projects 2026 net farm income at $158.4 billion, down $4.3 billion from last year. When adjusted for inflation, net farm income is expected to decline by $9.1 billion, or 5.5%.
Production expenses are forecast to move in the opposite direction, climbing 4.5% to nearly $493 billion. Higher fertilizer, fuel and livestock-purchase costs are expected to account for much of the increase.
Government assistance to agricultural producers is also projected to rise sharply. Direct government payments are forecast to reach $47.4 billion, nearly $20 billion more than last year.
Meanwhile, farm-sector debt is expected to exceed $605 billion, an increase of 4.6%.
The forecast illustrates the continued financial pressure facing producers as increasing operating costs offset stronger revenues in some parts of the agricultural economy.