USDA Forecasts Higher Net Farm Income

OMAHA (DTN) -- With an injection of government payments and strong livestock prices, USDA reported net farm income is projected to increase nearly 41% in 2025 despite financial challenges facing crop producers.

USDA's Economic Research Service released an updated look at farm income and finances on Wednesday.

Considered a broad measure of profits, net farm income is forecast at $179.5 billion for 2025, up $52 billion, or 40.7% higher than 2024. If the net farm income holds, it would be the second highest recorded, following $197.7 billion in 2022.

Yet, the good news for the overall agricultural economy masks some challenges in the sector, especially for crop producers. USDA also projects a typical farm household will lose money on its farm operation in 2025.

FARM HOUSEHOLD INCOME

The median farm household income for 2025 is projected at $109,515, up 3.7% after inflation is factored in.

That statement is somewhat misleading because USDA projects median farm income will fall to -$1,189 for 2025, a drop of -$59 from 2024. Farm household income includes off-farm income.

Off-farm income is where family farms might get a boost. Median off-farm income for 2025 is projected at $89,881, up about 0.6% after inflation.

USDA noted the numbers don't quite match. "Since farm and off-farm income are not distributed identically for every farm, median total income will generally not equal the sum of median off-farm and median farm income."

GOVERNMENT PAYMENTS

The top driver for higher net farm income would be direct government payments, which are projected at $40.5 billion in 2025, a $30.4-billion increase from 2024. Government payments are the highest since 2020 -- the height of the pandemic.

Congress last year provided farmers with $10 billion in economic aid: USDA's Emergency Commodity Assistance Program (ECAP). So far, USDA has paid out $8 billion in ECAP payments to 559,585 producers, according to USDA's website.

Along with that, Congress provided nearly $22 billion for natural disaster losses in 2023-24, which became the Supplemental Disaster Relief Program (SDRP). So far, about $4.76 billion has been paid to nearly 329,500 farmers.

Payments for conservation programs also rose to $4.8 billion, up 10.3% from 2024, with higher payments from Natural Resources Conservation Service (NRCS) programs.

Still, the traditional farm bill commodity programs were a small slice of income overall at $550.4 million in 2025, relatively unchanged from last year.

LIVESTOCK FORECAST STRONG

Farm cash receipts for livestock producers are forecast to increase $30 billion in 2025, or 11.2% higher than last year, topping $298.6 billion for cattle, eggs, hogs, broilers and turkeys.

Cash receipts for cattle and calves are expected to increase $17.7 billion, or 15.7%, with strong prices continuing to offset the smaller cattle herd.

Hog receipts are forecast to increase by $2.6 billion, or 9.5%.

Cash receipts for eggs are expected to grow by $7.5 billion or 35.4%, the highest of any sector.

Broiler income is expected to increase $1.6 billion or 3.5%

Dairy is the one livestock sector that saw a decline, with receipts dropping $500 million, or about 1% this year.

CROP OUTLOOK WEAKER

Cash receipts for crop producers are projected to fall $6.1 billion, or 2.5%, with lower prices for soybeans, corn and wheat. Total crop cash receipts are projected at $236.6 billion overall.

Grain and oilseed prices were lower, while receipts for fruits and nuts are expected to increase.

Soybean receipts are expected to drop $3.4 billion, or 7.2%, from 2024 to $43.5 billion.

Corn sales are expected to fall $2.3 billion, or 3.7%, from 2024 to $61 billion.

Wheat receipts are also projected to fall $1.1 billion or 9.8%.

Rice receipts are expected to drop by $500 million, or 14.8%, for the year.

Cotton receipts are projected to remain steady at 2024 levels at $5.3 billion.

Hay income is expected to fall by $200 million, or 2.5%.

Meanwhile, cash receipts for fruits and nuts are expected to increase $2 billion, or 6.5%, to $33.4 billion.

PRODUCTION EXPENSES

Farmers and livestock producers combined are expected to spend $467.4 billion this year on production expenses, up $12 billion, or 2.6%.

Feed expenses came in at $68.6 billion, but that's down $4.6 billion, or 6.2%, from 2024. Looking back to 2023, total feed costs are down $17.6 billion over the past two years.

The costs to buy livestock and poultry reached $59.9 billion, up $10.6 billion, or 21.5%, from last year.

Overall, USDA shows crop inputs such as fertilizer and pesticides were relatively flat or declined slightly.

Labor costs came in at $54.34 billion, or nearly $2.2 billion higher than last year. Looking further back, labor costs for 2025 are $12 billion higher than they were in 2022, just three years ago, a 29% increase.

Total interest costs also continue to rise, reaching nearly $30 billion for 2025, which was on par with 2024.

The full report can be viewed at https://www.ers.usda.gov/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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