U.S. farm income is expected to see only modest growth in 2026, with rising production expenses and inflation continuing to put pressure on farm businesses. USDA research economist Carrie Litkowski says net farm income is forecast to increase by less than half a percent this year, a gain that falls short of the inflation rate.
Farm Income Faces Inflation and Higher Costs
When adjusted for inflation, the outlook becomes more challenging. Litkowski says net cash farm income is forecast to decline by about 2.5%, while net farm income is expected to fall by $4.3 billion, or approximately 2.6%.
Rising input expenses and lower commodity prices are contributing to the pressure on producers. Total production expenses are forecast to increase by $21 billion, or 4.5%, in 2026.
The higher costs are also expected to increase reliance on government support. Direct government payments are forecast to rise by $19.5 billion, or about 70%, this year.
The combination of higher expenses and weaker commodity prices highlights the financial challenges facing many producers as they work to manage operating costs and maintain profitability.
Farm Balance Sheet Remains Relatively Strong
Despite the pressure on farm income, the broader farm sector balance sheet is expected to show nominal growth in 2026. Farm assets, debt and equity are all forecast to increase, with farm equity projected to rise 2.7%.
That provides some stability for the farm sector, although changes in land values, debt levels and production costs will continue to influence individual farm businesses differently.
Litkowski also points to an increase in average net cash farm income for farm businesses. The average is forecast at nearly $122,000, representing an increase of about 7% from 2025.
Still, the overall outlook shows why headline income gains do not necessarily translate into stronger purchasing power for producers. With inflation, higher input costs and lower commodity prices weighing on the sector, farmers will continue to face a challenging financial environment in 2026.
Listen to the full report for more details from Carrie Litkowski on the farm income outlook and the financial conditions expected across the U.S. farm sector.